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Virgin Islands (V1), the U.S, Department of Education (the Department) has designated VI a “lugh-risk grantee” under 34 CFR The Deparment | has been working closely with the Virgin Islands Department of Education { IDE} and with other Virgin BAG 2 Islands agencies in recent months to address these major issues, but it is clear that the problems cannot be corrected by the Virgin Islands immediately, and that the Virgin Islands will need more than one year to correct them. Therefore, in order to remedy this condition the Department has consented to enter into ‘this comprehensive, three-year compliance agreement with VI. Through this Compliance Agreement, the VI, with assistance from the Department, agrees to develop integrated and systemic solutions to problems in managing Federal education funds and programs. The issues are being carefully examined and addressed from the perspective of every VI agency and local entity with management responsibility for resources or programs that have an impact on education. Solutions may involve re-engineering systems and processes or implementing technology. In addition, solutions must address communication and cooperation among V1 Departments, and developing a culture of “getting the work done nght.” Whatever the solutions the VI chooses to implement, they must ensure the best educational systems possible for the people of the Virgin Islands. It is also understood that by the end of the term of this Agreement, VI must be in full compliance with the requirements of all programs funded by the Department. The Compliance Agreement is also intended to ensure an effective planning and evaluation process throughout VI programs and initiatives. Planning and evaluation processes are the basis for determining program goals, current status, improvement needs, budgets, resources, effectiveness of results, and other important aspects of effective program management. Through this Agreement, the VI will improve its program planning and evaluation for education programs and use the plans and evaluation results to drive management and resource decisions. This Compliance Agreement addresses four areas of crosscutting issues: (1) Program Planning, Design and Evaluation, (2) Financial Management, (3) Human Capital, and (4) Property Management and Procurement. The issues are presented as crosscutting because of the impact of other VI agencies on VIDE. Thus, it is critical that these issues be addressed not just in VIDE, but across virtually the entire Virgin Islands government. In addition, the issues cannot be addressed in a piecemeal fashion and they must encompass an effective planning and evaluation process The Compliance Agreement lists specific action items for each crosscutting issue. However, the Department will not determine the VI's progress in meeting the terms of the Agreement only by assessing completion of listed action steps. Rather, the Department will Judge progress by the systemic approaches and degree of integration that the VI brings in designing and implementing solutions to complex problems in each of the crosscutting areas, and by the demonstrated communication, cooperation, and organizational culture U.S. Virgin Islands Compliance Agreement change toward “getting the work done right.” These approaches should include effective planning and evaluation af resource and Management decisions that are designed to produce better educational resulis. in making the critical systernic and organizational culture changes required to meet the terms of the Compliance Agreement, it is important io understand that the Agreement is not designed to benefit the Department, VIDF, or the Virgin [stands government. All of the requirements of the Compliance Agreement are directed toward one end: improving education for the students of the Virgm islands, In the end, the Department and the VI will judge success by determining how well the VI has improved educational programs and met the terms of the Compliance Agreement. Il. Consequences for Not Meeting the Terms and Conditions of the Agreement A, Mutual Agreements and Understandings Regarding the Terms, Conditions and Enforcement of this Compliance Agreement Severability The parties agree that this Compliance Agreement includes terms and conditions that apply to the various Federal programs included in the Agreement (hereafter “covered Federal programs’) and alse terms and conditions that are program specific. To that end, the patties agree that each such term and condition for each covered Federal programs may constitute a separate agreement between the Virgin Islands and the Department. For purposes of 20 USC §1234f, each such term or condition as to each covered Federal program shall be severable from each other term or condition for cach of the covered Federal programs. Unless set out otherwise, a determination by the Department under 206 USC $1 234f (d) that the Virgin Islands is not meeting the terms and conditions may be specilic to such term, condition or program without impacting the continuing obli gations under the Agreement. That is, all other terms and conditions for all covered Federal programs or the specific term or condition for other covered Federal programs would remain in place for the duration of the Agreement or until such time as the Department determines failure by the Virgin Islands to meet those terms and conditions. Alternatively, the parties understand and agree that a determination by the Deparunent under 20 USC $1 23444) that the Vorgin islands has failed to meet any of the terms aud conditions shail, at the Department's discretion, be grounds for finding the Agreement, as to such terms and conditions, no longer in effect and that the Department may take any and all additional actions authorized by law. Some examples of such actions are set out below. de U.S. Virgin Islands Compliance Agreement Additional Terms and Conditions Under 34 CFR §80.12 Under this provision, the Department may apply additional conditions to one or more of the Virgin Islands’ grants, having determined that the Virgin Islands is a “high tisk” grantee {because it has a history of unsatisfactory performance and has not conformed to terms and conditions of previous awards). Special conditions or restrictions may include, but are not limited to: (1) payment on @ reirabursement basis, (2) withholding authority ta proceed to next phase until receipt of evidence of acceptable performance within a given funding period, (3) requiring additional, more detailed financial reports; (4) additional project monitoring; (5) requiring the Territory to obtain technical or management assistance, including the designation of a third-party fiduciary to administer all or part of the Virgin Islands’ grants from the Department, or (6) establishing additional prior approvals. The use of a condition for one covered Federal program does not require or preclude ils use for a different covered Federal program. Under such circumstances the Department would notify the Virgin Islands as early as possible, in writing, of the: (1) nature of special conditions/restrictions; (2) reason(s) for imposing them; (3) corrective actions which must be taken before they will be removed and time allowed for completing corrective actions; and (4) method of requesting reconsideration of conditions/restrictions imposed. Judicial Enforcement ! Cease And Desist Order Under 20 USC §§1234c(a)(2) and 1234e The Department may seek injunctive relief to compel specific actions or to stop specific actions. Under this process, he Department issues a complaint to the Virgin Islands, deseribing the factual and legal basis for the Department’s belief that ihe Virgin Islands is failing to comply substantially with a requirement of law including this agreement, and containin ganotice of hearing. A hearing before an Administrative Law Judge (ALJ) must occur. The ALJ's report and order, requiring the Virgin Islands te stop specific actions or compelling specific actions, becomes the final agency decision. The Department may enforce the final order by withholding any portion of the Virgin Islands’ grant award or certifying the facts to the Attorney General who tay bring an appropriate action for enforcement of the order 2. Referral To Department Of Justice For Appropriate Enforcement—20 USC $1416 ifthe Department finds, after reasonable notice and opportunity for hearin 9 to the Virgin Islands, that: (1) there has been a failure by the Virgin Islands to comply substantially with any provision of applicable Federal laws; or (2) there is a fadure to comply with any condition of a Local Educational Agency’s or the Virgin Islands’ eligibility (including terms of Compliance Agreement within Lay U.S. Virgin Islands Compliance Agreement timelines specified in Agreement), the Department may, afier noti fying the Virgin Islands, refer the matter for an appropriate enforcement action, which may include referral to the Department of Justice. Withholding of Grant Funds—20 USC §§1234e(a)(1), 1234d and §1416 if the Department finds, after reasonable notice and opportunity for hearing to the recipient, that there has been a failure to comply substantially with a requirement of law, meluding with this Agrcemert, the Department may withheld, in whole or in part, future payments to the recipient. ‘tthe Deparment finds, after reasonable notice and opportunity for hearing to the V irgin Islands, that: (1) there has been a failure by the Virgin Islands to comply substantially with any provision of applicable Federal laws: or (2) there is a failure to comply with any condition of a Local Educational Agency’s or the Virgin Islands’ eligibility (including terms of Compliance Agreement within timelines specified in Agreement). the Department may, afler notifying the V irgin Islands, withhold, in whole or im part, any further payments to the Territory. Departrnent may limit withholding to a particular Local Educational Agency or State agency. ? Escrow Account to Fund Third-Party Ifthe Virgin Isiands fails ta meet 2 term deemed significant by the Department in the Compliance Agreement, the Department may place an appropriate amount of the Virgin islands grants into an interest bearing escrow account to fund the duties of a third party fiduciary agent. V1 may request a reconsideration of this action, Recovery of Funds — 20 USC §1234a Any funds improperly expended or not properly accounted for are subject to recovery by the Department according to 20 USC §1234a. B. Criteria for Determining Consequences The Virgin Islands will provide the Department with quarterly progress reports for all of the action steps and performance measures set forth in the Agreement. The Virgin Islands and the Department agree that failure to (1) provide all required reports in a timely manner, (2) show substantial progress in completing all action steps as required, (3) complete critical action steps within the timeframe designated in the Agreement, or (4) achieve critical performance measures as specified in the Agreement, will be considered a failure to meet the terms and conditions of the Agreement. U. S. Virgin Islands Compliance Agreement Til. Reporting Requirements Tins Compliance Agreement requires regular progress reporting for all issues, VI must orovide the Department (1) a description of activities and progress for the issue and its related sub-iesues during the reporting period, (2) the status of each action step required to be taken dunng the reporting periad, (3) documentation of action step completion for those steps required to be completed during the reporting period (including explanation of delays for all steps not completed that were scheduled to be completed, and expected completion dates for all unimpiemented steps}, ( 4) cocumentaiion of measures of performance and results, and (5) other data or documentation as specified within the action steps for each issue or related sub-issue in this Agreement. This information should be transmitted to the Department by updating (at jeast quarterly) an internet web site developed and maintained by the Virgin Islands Government. The Virgin Islands Office of Management and Budget (VIOMB) will be responsible for tracking, monitoring and reporting progress on all requirements and milestones in this Agreement in a manner that is fully accessible to the Department and the public. Information in the progress tracking web site should he updated continuously, but in any event, no later than 30 days from the last day of each quarter. The first quarterly period will encompass the time from which all parties siga this Agreement through December 31, 2002. he V1 and the Department agree that the following performance measures apply tor each issue and sub-issue, in addition to other performance measures specified throughout this Agreement, All plans, other documents, and reports are timely, complete, accurate, and address the requirements set forth in this Agreement. All action steps are implemented within the timeframes set forth in this Agreement. 3. Implementation of action steps demonstrates progress towards achieving the outcomes or performance measures set forth in this Agreement, IV. Updated Plans, Action Steps, and Timelines from December 2001 Meeting Acuon steps and lmelines that the VI developed in December 2001 are included in the issue descriptions throughaut this document. The V1 will need to assess the action steps and timelines developed in December and determine if (1) the action steps fully meet the requirements of this Agreement, (2) the action steps will move the VI toward achieving the required performance measures, and (3) the timelines need to be modified within the time boundaries set forth in this Agreement. Updating the Decernber action steps and timelines into plans for which the Vi will be accountable is a critical action atep for each issue and sub-issue. Once the VT develops a plan for cach issue or sub-issue, as specified in this Agreement, and the Department agrees to the plan, the action steps and timelines in the plan will become additional requirements of this Agreement and be subject to the reporting requirements and consequences for U. S. Virgin Islands Compliance Agreement not mecting terms and conditions as set forth in this Agreement. The Department will assist by consulting with V1 io develop reports or reporting formats that shail satisfy the reporting requirements as set forth in this Agreement. The Department will also assist, ta the extent that resources are available, the V1 with the orientation and training of personnel. The remainder of this document provides issue descriptions, action steps, and performance measures for (1) Program Planning, Design and Evaluation, (2) Financial Management. (3) Human Capital, and (4) Property Management and Procurement. V. Issues Issue 1.0: Program Planning, Design, and Evaluation Issue Description Because the stated purpose of this Agreement is to improve education for the students of the V1, it is critical to successfully meeting the terms of this Agreement that the V1 use the first year of the next three year period to develop long-term poals, assess the current status of each program receiving Federal assistance. and design coherent programe te bridge the gap between the current status of education in the Vf and its educational goals and applicable requirements, An issue of significant importance to program planning, design, and evaluation is the legal and administrative impact of the Organizational structure and legal classification of the various educational agencies tn the Virgin Islands. This Compliance Agresment has been drafted in reliance upon the nuatual understanding that the Virgin Islands has established and mainiains a State educational agency (SEA) and two local educational agencies (LEA), as defined under Federal law. Thus. for purposes of administering its Federal grants, VIDE, as the SEA, must make steady progress towards meeting all Federal requirements that are related to that designation, including where specified, providing LEAs, the St. Thomas/St. John school district and St. Croix schoo! district, the appropriate levels of Federal funding and autonomy required under each Federal program’s requirements. Therefore, by entering into this Agreement, the Vi acknowledges the Department’s reliance upon this designation, agrees to comply with the specific Federal requirements that apply through this desi gttation and agrees not to change this desi gnation during the period of this Agreement without the prior approval of the Depariment. . Effective planning and design includes the following elements: (1) program goals stated in measurable terms (outcome measures}, (2) baseline assessments of current status (baseline méasires), (1) comparison of current status to program goals (bascline measures to outcome measures), (4) a report of areas where current programs do not meet goals, (5) a plan to improve current programs to meet goals, (6) a schedule for implementing the plan, (7) measures to determine if the plan implementation is having the intended effect, and (8) options for further modification if implementing the plan is not having the intended effect. Any planning and design process U.S. Virgin Islands Compliance Agreement will take inte account Pederal and State requizements for each program, as well as other applicable professional standards. Tn addition, the planning process should include citizen and/or customer input and feedback; input is a vital part of the process to set goals, and feedback ts equally significant in assessing results. A critically important aspect of the planning and design process is that it is fully integrated as the foundation for other pragram-related decisions about budgets, financial management, personnel requirements, and other resource needs. in order to fully inyplement this process, a comprehensive. school-based, statewide plan will be developed. The Department will provide model comprehensive plans, if appropriate, and referrals to successfial jurisdictions for guidance. WI] will seek the assistance of expert consultants and other grantees to provide hands-on guidance in completing the comprehensive planning process. Reasonable and necessary expenses for this assistance will be considered allowable costs chargeable to a Department grant to be awarded by September 30, 2002, provided an approvable application is received in a timely manner. The expected outcomes identified in this plan, among other federally and locally identified outcomes, will include: * Schools gain greater site-based authonty ta determine needs and apply funding to those needs. # School site-based management will be enhanced through greater school cammunit y involvement and increased awareness of acccninlability. Programs can be unplemented that best fit the needs of the individual school population rather than one district approach for all. Activities conducted under this plan bring V1 into compliance with statutory and regulatory requirements for Department programs. In general, the comprehensive statewide plan should be based on information derived from individual school plans. These school plans should include, at a minimum, the components listed below. * A comprehensive needs assessment of the entire school, based on information about student academic achievement. * Strategies that provide opportunities for.all children to meet proficient and advanced levels of academic achievement, use effective methods of instruction that are based on scientific research and address the needs of all children in the school. * Instruction by highly qualified teachers as defined by the Elementary and Secondary Education Act. High quality and ongoing professional development for teachers, principals, and other staff. Strategies to attract high-quality teachers in all schools, but with special emphasis on high-need schools. Strategies to increase parental mvolvement. Plans for assisting preschool children in the transition from early childhood programs to local elementary school programs. Measures to include teachers in decisions about academic assessment. Assistance for children who experience difficulty mastering the proficient or advanced levels of academic achievement standards. 2 o¢ & & & & 9 U. S. Virgin Islands Compliance Agreement « Coordination and integration of Federal, State and local services and programs. * Annual report cards fer the performance of each schaol as defined by the Elementary and Secondary Education Act. * All expenditures are allowable under the requirements of each grant and applicable prograrn. This comprehensive plan for reforming the total instructional program in the school should be developed during the first year period, with the involvement of staff, parents, administraters, and others. The plan must: Describe how the school will implement the components summarized above. Describe how the school will use resources to implement the components, include a description of Federal, SEA, and LEA programs that will be available in the individual school. Describe how the schoo! will provide parents with individual student academic assessment results and other information about the individual schools, including interpretation of the resulis, in understandable language. eo & & & identification of Long-Term Goals For each Federal program it 1s important to identify the desired or required outcomes, so VI can measure improvement for that program by how close it is to achieving these goals as well as maintaining improvernent on a continuous basis. Examples of this are: * For the Title V, Part A program, the law requires states to aim for increased student academic achievernent ar improved quality of education for all students. # For the Vovational Education and Adult Education programs, the desired outcomes are defined by the program statutes in terms of the core indicators of performance or additional V1-identified indicators that measure student performance. Assessment of Current Status of Programs in Terms of Goals This sub-issue involves an assessment at the VI-wide and school level of each Federal program in terms of the goals identified. It also requires VI to identify a measurement approach (a method for measuring) for each goal or core indicator. Once the nieasurement approach is identified, V1 must establish a baseline that reflects the current status for each goal or indicator. Examples of this include: « Far the Title V, Part A program, V1 must identify the current academic levels for the students benetiting from the program, which is the baseline, and establish incremental targets for improvement to reach the goals identified in sub-issue 1.2. * For the Vocational Education and Adult Education programs, the VI must establish a baseline and levels of performance (incremental targets) for each required core indicator and an y Vi-identified indicators for cach of the subsequent years of this Agreement. U. §. Virgin Islands Compliance Agreement Identification of Educational Program Needs to Meet Goals Once the V1 has identified its baselines m comparison to its goals, it must identify the needs that have to be met to bndge the gap between the baseline (current status) and the goals. The needs must be consistent with the purposes and allowable activities under each program. In developing program activities, VIDE will have as a goal that by the end of the three year period of this agreement, 95% of the Federal education funds will be spent on imstructional activities and directly related expenditures. Development of Program Design and State Plans or Applications that Address Identified Needs The Vi must develop, prepare, and submit to the Department a State application in conformance with the requirements of each program for which fimds are being expended and any other requirements set forth in this Agreement, These applications should be aged on uiformation gathered from the school-based comprehensive plans developed under this section. Sub-Issue 1.1: Separation of State and Local Educational Agencies Sub-Issue Description ina letter dated August |, 2001, at the request of the Department and VIDE, the Attorney General of the Virgin Islands provided the legal opimion that under local law, the structure and functions of the various educational agencies in the Virgin Islands were divided info, VIDE, as the SEA, and the 81, Thomas/St. John school district and the St. Croix school district, as the two LEAs. This has sigmficant implications for the administration of Federal cducation programs. For example, under Part B of the Individuals with Disabilities Education Act, the SEA must ensure that eligible LEAs receive subgrants under the formula specified at 34 CER $300,712. Additionally, under Title V of PSEA, an LEA is to have complete discretion in deciding how to allocate funds among the allowable Tite V program areas, and must ensure that its Title V expenditures carry out the purposes of the program and are used to meet the educational needs in schools within the LEA. The specific terms of this Compliance Agreement contemplate the administrative structure of one SEA and two LEAs. Performance Measures for Issue 1.0 and 1.1 \, By the end of the three-year period of the Compliance Agreement, Vi will be in full compliance with the program requirements of all Department grants for which V1 expends fimnds and an ¥ other requirements set forth in this Agreement, U.S. Virgin Islands Compliance Agreement 2 Vi's unplementation of the action steps described below brings it inte full compliance with the standards and assessment requirements of Tite 1, ESEA thar all States were required to meet by the end of the 2000-2001 school year, nO later than the end ef the three ‘ad vear period of the Campliance Agreement. By the end of the three-year period of the Corapliance Agreement, V1 must have developed a detailed plan for how it will comply with the requirements of the Elementary and Secondary Education Act, including Title 1, Part A of the ESEA as reauthorized by the No Child Left Behind Act. We expec! that at the end of the thre e-year period, VIDE will apply for mast or all of the individual programs authorized under the Klemenary and Secondary Education Act, the Adult Education and F. amuly Literacy Act rather than consolidating them and two LEAs. Action Steps Required 4. By the end of the three-year period of the Compliance Agreement, VI's unplementation of the action steps described below must bring is programs into full compliance. with respect to Federal law and with the obligations and responsibilities of a single SEA Year 1 Year 2 Year 3 } The Vitnaust subwie co the Depaninem within 170 days from the date of the complisece apreement. an approvable action plan that can demonstrate steady progress toward developing a comprehensive statewide eoneolidated grant application plan and fiscal veer 20M described in Heme two and diree below action plan for complying with the requirements of various programs funded by the Depanmnens including, bul net Hered ie: Tide 1, Part 4 of BSEA standands and assessment requirements, Vocational Education Stare Pian, Occupational and Employment contmuation prant, an must melude, ata wanimum, the following element: (1) goals stated in Adolt Education, aad Tide VA. Th messurable terme (outcome ease requiremennm: 2s) based ct py status (baseline measures); (3) comparison of the VI's current status to the goals including an appropriate needs avessanient!: (4). renoci of areas where current prowrams Within the first year of the Compliance Agreement the VI must develop a comprehensive, school-based, statewide ‘baseline assesanwnts of the V's careers re In the second year of the Compliance Agreement, the VI will implement the comprehensive, statewide plan and demonstrate that it is achieving the program goals that are required. In the second year of the Compliance Agreement, the VI will demonstrate steady progress towards meeting all Federal requirements related to the designation of a single SEA and two LEAs and is ready to meet all requirements. The VI will prepare and make public annual teport cards for the performance of each school as defined by the No Child Left Behind Act. The VI will prepare and submit semi-annual expenditure report that includes certification that all expenditures are for allowable Fed In the third year of the Compliance Agreement, the VI will implement the comprehensive, statewide plan and demonstrate that it is achieving the program goals that are required. In the third year of the Compliance Agreement, the VI will meet ali Federal requirements related to the designation of a single SEA and two LEAs and is ready to meet all requirements. By the end of the three-year period of the Compliance Agreement, VI will have submitted a detailed plan for how it will comply with the requirements of the No Child Left Behind Act, including Title I, Part A of the ESEA as reauthorized by the Ne Child Left Behind Act. [2 U.S. Virgin Islands Compliance Agreement do not meet goals; (5) action steps to improve current programs to meet goals; (6) a schedule with clear, reasonable completion dates for implementing the action steps; (7) measures to determine if the plan implementation is having the intended effect; (8) options for further modification if implementing the plan is not having the intended effect; (9) demonstration of citizen and customer input and feedback; and (10) demonstration of its foundation for decisions about budgets, personnel requirements, and other resource needs. Other requirements of the plan are included in section 1.0 above and applicable laws and regulations. Within the first year of the Compliance Agreement the VI must include in the development of a comprehensive, school-based, statewide action plan such action steps that will show steady progress in meeting the requirements of Department grants with respect to separate SEA/LEA, issues described in sub-issue 1.1 above. 4. Prepare and submit semi-annual expenditure report that includes certification that all expenditures are for allowable purposes (the reports will include the detail required in the FY 2000 special conditions). purposes (the reports will include the detail required in the FY 2000 special conditions). The VI will prepare and make public annual report cards for the performance of each school as defined by the No Child Left Behind Act. The VI will prepare and submit semi- angual expenditure report that includes certification that all expenditures are for allowable purposes (the reports will miclude the detail required in the FY 2000 special conditions). Issue 2.0: Financial Management fssue Description It 1s critical to successfully meeting the terms of this Agreement that the VI use the next three years to develop a credible central financial management system (FMS). In brief, such a system would provide the correct amount of funds, in the correct accounts, ina timely manner, all the time. Credible financial management includes systems, policies, and procedures that (1) provide access to accurate information when needed, (2) account appropriately for funds, (3) ensure timely deposits or draw down of funds, (4) ensure timely and accurate payments, and (5) otherwise enable and support generally accepted government financial management and accounting standards and requirements. In addition, VIDE, VIDF and other VI Departments must demonstrate improved communication and cooperation to develop an FMS that meets needs across the VL. U. S. Virgin Istands Coropliance Agreement Through the terms of this Agreement, financial Management svstems will be integrated with one another (i.<.. acrass departments} and with other management system ¢ including budget, human resource management, property and procurement, and planning and evaluation). One example of the integration required includes connecting financial management policies and svstems with time and attendarice systems to ensure appropriate payment and accounting for staif time. [t is especially important for the purposes of this Agreement that the VI financial management system is ellectivelv integrated with all management systems and procedures in VIDE. AU) af the action steps to address the financial Management issue are important, but it 1s a critical factor for success that the VI improve its cash management function unmediately, The cash management function must be able to provide timely and accurate information about each draw down of funds from the Department. Inability to track drawn down funds will be considered a failure to meet he terms and conditions of this Agreement. , in addition to the overall requirement to develop a credible central FMS, this Compliance Agreement also addresses issues related to {1} imdirect costs, and (2) obligation of funds and disbursement of obligations. Both issues are closely tied to a credible FMS and the Department will assess progress im meeting the terms of this Agreement by the systemic approaches and degree of integration that the VI brings in designing and implementing solutions to all of its longstanding problems m the financial management area. Sub-Issue 2.1: Credible Financial Management System Issue Description This sub-issue involves many areas that must be systemically addressed. In December 2001, VI staff identified a series of action items related to addressing the FMS issues, mcluding information flow, adjustments, system unprovements, training, payroll, reporting systems, draw downs, and other areas. Department staff have further supplemented VI’s list. One example of the FMS issue Was illustrated in the 2000 single audit findings: the auditors are still using different Department (e.¢., VIDE) accounting records to compare with Department of Finance records. Invariably, the cash accounts show shortages in terms of amounts drawn from Federal agencies as compared to ‘V1 Departments’ records, To satisfy the requirements of this Agreement, the VI will develop a credible central FMS in which records account for all draws and expenditures of Federal education funds. VI agencies and single auditors will be able to rely on the central FMS as an accurate system of record. In the short term, any differences between the Department of Finance and VIDE will be recanciled concurrently, but af the end of three years, VI agencies should no longer need separate accounting systems. U.S. Virgin Islands Compliance Agreement Performance Measures for Issue 2.0 and 2.1 1. Wethin one month of the inception of this Agreement, appropnate VIDE, VIDH, VIOMR and VIDE staff members will be provided with access to the Department’s GAPS system te moniter draw downs. “eat and 2. By December 31, 2002, the VIDF will complete a vision document for the unplementation of a credible central FMS. By March 31, 2003, the VIDF will complete a plan for developing and implementing a credible central FMS. “ From the inception of this Compliance Agreement, all transactions for draws and disbursements, as well as any required adjustments for Federal education programs’ funds will be timely and accurately recorded occur according to generally accepted accounting standards. Inability to trac meet the terms and conditions of this Agreement. as By the conclusion of the third year of the Compliance Agreement, V1 wi expenditures, resolve any differences, and record appropriate adjustments. 6. By the conclusion of the second year of the Compliance Agreement, the V¥ within VIDE that will abide by the standards for internal audit prese 7. By the conclusion of the Compliance Agreement, VI agencies will 2] for the financial statement audit, By the conclusion of the Compliance Agreement, single auditors will be able to rely in the VIDF accounting system as they k drawn down fiands will be considered a failure to il conduct monthly reconciliation of draws and twill institute an independent internal audit function sibed by the Institute of Intemal Auditors (IIA). no longer need. separate accounting systems. on the FMS as the accurate system ef record Action Steps Required Year I Year 2 Year 3 Within one month of the inception of this 1. Twice during the 2003-2004 school year, the 1, VI will conduct monthly reconciliation Agreement, appropriate VIDE and VIDF staff members will be provided access to the Department’s GAPS system to monitor draw downs. 4. By December 31, 2002 the VIDF will create a vision VI will publicize the U.S. Department of Education Office of Inspector General Hotline telephone number 1-800-MISUSED and the Department of Interior OIG Hotline (1-800- 424-5081) to all schools, teachers, parents of between GAPS, VIDE, and VIDF draws and expenditures, resolve any differences, and record appropriate adjustments within 30 days. a ‘ah U.S. Virgin Islands Compliance Agreement docurment of a credible central PMS. The vision document will specifically describe how the system would (1) provide access to accurate information — when needed, (2) account appropriately for fands, (3) ensure timely deposits or draw down of funds, (4) ensure timely and accurate payrnents, (5) ensure, prior to archiving any financial data, the capacity to retrieve that data in the future, and (6) otherwise enable and support generally accepted government financial management and accounting standards and requirements. The vision document will also describe how the central FMS would serve as an accurate system of record that would no longer tequire separate accounting systems in different agencies. The document will also provide a detailed diagram of each function of the system and how it would integrate with other related systems or processes, (including, but not limited to, program planning, grant administration, budget, property and procurement management, time and attendance, human resource management, and payroll). The vision document and plan (see #3 below) will be based on an independent party performing a needs assessment for the financial management system. By March 31, 2003, the VIDP will create a plan for how it will develop and implement the credible central FMS described in the vision document. The plan will also include resource requirements for implementing the plan, with action steps and timelines, and identify how the resources will be obtained. The vision document (see #2 above} and plan will be based on an independent party performing a needs assessment for the financial management system, Sunng the first year of the compliance agreement, Vi well conmluct sermi-annial reconciliation benveen GAPS, VIDE, and VIDF of draws and expenditures, resolve any differences, and record appropriate students in schools, participants in adult education and vocational education programs, VIDE employees, and the public and encourage anyone with any knowledge of misuse of Federal education program dollars to call the Hotlines. By the conclusion of the second year of the Compliance Agreement, the VI will institute an independent internal audit function within VIDE that will abide by the standards for internal audit prescribed by the Institute of Internal Auditors (ITA). In this regard, VIDE will create an independent Audit Committee that will make all audit resolution decisions for the VIDE and to whorn the internal auditor will report. VI will conduct quarterly reconciliation between GAPS, VIDE, and VIDF of draws and expenditures, resolve any differences, and record appropriate adjustments within 30 days. bo Twice during the 2004-2005 school year, the VI will publicize the Federal education Office of Inspector General Hotline telephone number 1-800- MISUSED and the Department of Interior OIG Hotline (1-800-424-5081) to all schools, teachers, parents of srudents in schools, participants in adult education and vocational education programs, VIDE employees, and the public and encourage anyone with any knowledge of misuse of Federal education program dollars to call the Hotlines. U.S. Virgin Islands Compliance Agreement adjustments within 30 days. These reconciliations | will be provided on a semi-annual basis to the : Departrnent for review with evidence that all adjustments have been made. Twice during the 2002-2003 school year, the VI will publicize the Federal education Office of Inspector General (OIG) Hotline telephone mumber 1-800- MISUSED, and the Department of Interior O1G Hotline (1-800-424-5081) to all schools, teachers, parents of students in schools, participants in adult education and vocational education programs, VIDE employees, and the public and encourage anyone with any knowledge of misuse of Federal education program dollars to call the Hotline Sub-Issue 2.2: Indirect Costs Sub-Issue Description The indirect cost issue relates to the manner in which the indirect costs associated with Federal funds are distributed within VI. OMB Cirenlar A-87 specifies indirect cost requirements. In December 2001, officials from ED. V1 and other Federal agencies developed and agreed on a three-phase process to address the indirect cost issue. Phase 1 of the process oullines steps tor indirect cost determination and distribution; Phase II outlines steps for making tate application corrections, and Phase II outlines steps for preparing a new rate proposal. The VI will implement the agreed upon steps of the process in a timely manner and report progress to Performance Measures for Issue 2.2 | As described below, steps to determine indirect costs and distribute indirect cost reimbursement between the VIDE and the VI will bé fully implemented by OCTOBER 1, 2002 in accordance with VIOMB’s new policy. The new OMB policy will provide for a pro rata allocation that segregates central service indirect costs from agency level or departmental indirect costs. 2. By the beginning of Fiscal Year (FY) 2003, the VI and the Department must have agreed on an indirect cost rate to use for FY 2003. Rae aed U.S. Virgin Islands Compliance Agreement had Starting April 1, 2003, unused leave for separating emplavees will nat be charged directly to Federal programs, but allocated only as indirect costs. All ef the underlying problems having to do with indirect costs will be eliminated by FY 2004, so that audits and other monitoring procedures will have minimal findings related to indirect rates in F¥ 2003. and no findings related to indirect rates in FY 2004 and By the conclusion of the Compliance Agreement, there will be 160 percent application of the correct, current indirect cost rate in education srogrars. Action Steps Required Officials from V1, the Department and other Federal agencies agreed in December 2601 about three phases of action steps to address the indirect cost issue. The phases, related steps, and agreed upon time lines are listed in the table below. (Steps listed in bold were added by the Department staff members after the December 2001 meeting). Year | Year 2 __ Year 3 Phase I: Indirect Cost Determination and Distribution # ifthe steps or timelines listed an this table are no longer valid. the VI will ask the Department te consider a revised plan of acon steps and timeline by October 1, 2007. in addins taather cequiremenre set forth im the &sperting Requirements secon of this document, the quarterly reports for this sub-issue will include a copy af the products developed for each step of the process. > DOD 1G will submit lewer wo the Legialanwe and Governor qutlinung the indirect cost find sharing issue. Develop cost policy staement regarding Indirect Coat Fund Shearing. OME sill suluait policy change recommendation and potential changes to the existing slation on the indirect cost fund, if aecesaary, ta the Legislature with copies to the 3. Department of Interior (DOU) and the Departne: indircet cost staff tangent cast policy ienplate tw VI OME. VIDE will provide cost pelicy statements w the Department and DOI by September 30, 2002 Cost policy statements will be amended as appropriate to account for the LEA/SEA relationdun. U.S. Virgin Islands Compliance Agreement « OMB val provide agencies with account codes for teceipt aed expenditure of indirect cost funds. Any shortfalls will be absorbed by VIDE, aor VIDE programs. * VIOP will propose accounting changes to implement new mdirect ealicy for review by the Department and DOL by September 36, 2002 The policy must address wiused leave for separating employees * Training needs will be identified. * ‘Training will be planned and scheduled. * Training will be implemented Phase IH: Rate Application Corrections 4 @& &@ F @ Delermune amd correct current rates, ac necessary. As needev|, correct the rate table and pply correct Taies tu current grant programs Review PY 2002 indirect cost rates on FMS versus current rates on indirect rate plan. Revew the prior year indirect costs applied 16 grants and prepare necessary adjustments. Develop a procedure te report indirect cost rate application errors te VIDE Phase lil: New Rate « Oliaim three-year tate proposal sith the following stems * issue RPP tor 2002-2004 * P& P issue invitations for bids. # P& P review bid packages. * Contract sent to Justice. 8 Justice reviews comract and forwards ti Governor's legal counse!, * Coetract execnted. ae Contract work performed. * Submit rate proposal to IG. * Subnut draft agreements te agencies for review and approval simmeture. ce iniplerment new rates / Sub-Issue 2.3: Obligation of Funds/Disbursement of Obligation Sub-Issue Description Federal education funds in the VI must be obligated and disbursed in a manner that ensures that programs are appropriately managed. Specifically, application for funds should be based on program plans, and funds disbursement should occur as the program plans dictate and be tied to specific activities. In addition, funds should be spent in a timely manner based on resource requirements for activities specified in the program plans. Under the terms of this Agreement, the VI will develop a grant application process and 19 U.S. Virgin Islands Compliance Agreement subsequent spending process that ensures that grant awards are based on specified program plans and spent on the programs in 4 timely manner. The grants svstems will be integrated with the central FMS. The outcome measures for this issue are that (1) program plans are the basis for application and disbursement, (2) disbursements are tied to actions specified in program plans, (3) all funds are spent for allowable purposes under the statutes, and (4) no funds are lost due te lapsing obligation periods. Performance Measures far Issue 2.3 1. The VI will complete an analysis of past problems with program planning, obligation, and disbursement by September 30, 2002. 2. The VI will develop a plan to re-engineer its grants application, planning, and disbursement by March 31, 2003. 3. The VI will fully implement the plan to re-engineer its grants application, planning, and disbursement by March 31, 2004. 4 Within one month after the Compliance Agreement is signed, the VI will put in place a system of safeguards to assure that lapses ot furnis will be minimized. 5 We lapses of fursis will occur after March 31. 260%. Funds lapse when the deadline allowed by law to obligate Federal grant awards has passed and funds remain that have not been properly obligated. These funds are no longer available to VI for use. 6 In the final year of the Compliance Agreement, (1) program plans will be the basis for application and disbursement, (2) all disbursements will be tied to actions specified on program plans. (3) all funds are spent for allowable purposes. under the statutes, and (4) no funds will be lost due to lapsing obligations periads. ¢, The grant application, planning, obligation, and disbursement functions will be fully integrated with the FMS by the conclusion of this Compliance Agreement. 8. Af the end of the three year period, VI will liquidate obligations on a timely basis and not need extensions in the liquidation period. Action Steps Required In December 2001, VI staff members developed the action items listed below to address the obligation of funds/disbursement of funds issue. Although the action items are an important first step, they do not go far enough in ensuring a grant application, award, and spending system that ensures that needed funds are received and fully spent to support programs. The table below provides further required action steps. U. S. Virgin Islands Compliance Agreement Receipt of Grant Award ® a AIL DOE grant awards and extension approvals should go to the VIDE Commissioner with a copy to VIDE Federal Grants Office who will distribute copies to the Board of Education, VIOMB and VIDE. Access to GAPS system to review all grant awards as an extra check on grants. Grant Periods & Extensions should be requested by program managers in wriling 0 days pnor to the expiration date of the Brant to justify the reason for the extension. For all grants to the VI government, extensions apply ONLY to hquidation of expenses that were obligated dunng the Federal funding period specified in the oram award, Quarterly performance meetings to evaluate reported expenditures against the spending plan. Develop a grant tracking system. Quarterly prepare lists of expiring grants to be provided to the Commussioner, which include the percent of funds expended. Document the rules about obligation and extension dates, Year i Year 2 Year 3 Within one month after the Compliance Agreement 1 signed, | 1. The plan to re-engineer the grant . The grant application, planning, ihe VIDE will implement a policy statement i¢lineating the application, planning, obligation, and obligation, and disbursement procedure for reviewing and processing sub gramee awards i disbursement functions will be fully functions will be fully integrated expedite allocations and disbursement of Federal funds to implemented by March 31, 2004 with the FMS by the conclusion of eligible applicants within five days of receipt from the LEA this Compliance Agreement. program: office. Applications not approved for fanding will be retuned to the Program Office origmatiag the proposal within the five working day period. If the dreline requirement is not met, the Conmmissioner will submit a letter af explanation to the fueding- agency within BIS, with a upry w) ihe affected program. Within 45 days after the Compliance Agreement ix summed, the Vi-will put un place a system of saleguards tw assure that lapses of funds will be minimized. By Semember 20, 2002, che VI will provide the Department with (]) a list of Federal requirements for program placename, obligation, and disbursement of funds, and (2) an analysis of the VI's education grants for the past fiseal year that species where problems im meeting requirements occurred in progr planning, obligation and disbursement, and wiry the problems occurred. U.S. Virgin Islands Compliance Agreement Be Based on the analysis of requirements and past problems, the VI will develop and provide the Department with a plan, by March 31, 2003, to re-engineer its grant application, planning, obligation, and disbursement functions. The plan will include policies, procedures, and systems to ensure that (1) program plans are the basis for application and disbursement, (2) disbursements are tied to actions specified in program plans, and (3) no funds are lost due to lapsing obligation periods. *. By March 31, 2003, the VI will create a common template and timetable for all program plans. Such a template and timetable will structure planning information and provide a structure for activity-based disbursement plans and decisions. Issue 3.0: Human Capital issue Description The human capital issue area encompasses two significant sub-issues: (1) recruiting and hiring, and (2) time and attendance accounting and supplanting. The recruiting and hiring issue involves ensuring that qualified teachers and related service personnel are available for students in every classroom. The time and attendance accounting and supplanting issue deals with ensuring that personnel paid by Federal education funds are in fact performing the appropriate jobs in the programs they were funded to work in. Timelines or action items under this Compliance Agreement do not replace and/or exclude any requirements of previous Compliance Agreements. For example, the VIDE IDEA-Part B Compliance Agreement states: “By 12/01 VIDE is to have hired qualified personnel to fill 85% of any vacancies (related to special education vacancies) that occurred after 10/99.” That requirement, and al] others under the previous Compliance Agreement will remain in force. Sub-Issue 3.1: Recruiting and Hiring Sub-Issue Description Ensuring that there is a highly qualified teacher in every classroom is critical to improving education in the VI and to complying with Federal education requirements. Through this Agreement, the VI will address the human capital issue in the immediate, short, and U.S. Virgin Islands Compliance Agreement long terms. In the immediate term, the VI will develop « policy for class coverage that ensures that adults are supervising every classroom! at all tirnes that students are present. In the short term, the V1 needs to determine how maany highly qualified teachers they currently have in the schools and how many they need, and develop a plan to hire or otherwise en gage the services of the teachers or other qualified personnel that they need aver cach of the next three schol years and beyond. In the longer term (although these aclions are not covered under this Compliance Agreement), the V1 will create initiatives to encourage young people fo take up teaching aa a career and to prepare them for such careers. The VI will re-engineer its hiring process so that teachers and related personnel can be moved inte the schools quickly, and receive their first paycheck on a reasonable time schedule. In December 2001, V1 staff members identified action sieps to address recruiting and hiring concerns. However, the V1 aceds ta consider a mack fuller range of options for getting qualified teachers and related personnel imo classrooms, and it must do se quickly. Students cannot easily regain educational opportunities Jost to them for each year that they do not have a qualified teacher Performance Measures for Issue 3.0 and 3.1 VIDE will immediately implement its expedited hiring authority and use the authority in hiring qualified teaching staff. Bad VI will develop hiring goals and priorities for five years by March 31, 2003. VI will meet its hiring goals for the 2003-2004 school year. Nabe 4. VI will meet its hiring goals for the 2004-2005 school year, 3. In the 2002-2003 school year and beyond, there will be no instances of classes or students without adult supervision. 6. By the beginning of the 2003-2004 school year, all newly recruited staff will be deployed within one month of acceptance of an employment offer and will receive their first paycheck within one month of starting work (with respect to Special Education, the lerris of the MOA shall apply. Action Steps Required Vear 1 Year 2 Year 3 1. By OCTOBER 31, 2002, the VI will develop policies and | |. VI will meet its hiring goals for the 2003- i. -—- VI will meet its hiring goals for the i nigeedures for class erage (ie. aj bstitute omit school year sddition to the vems 2004-2005 school year, In addition to 23 U. §. Virgin Islands Compliance Agreement be ‘bd procedures for class coverage (Le., by using substitute teachers, admunistrators, supervisors, principals, etc.}, in the event that a teacher is unable to be in the classroom when students are present. By DECEMBER 31, 2002, the VI will determine the percentage of classes conducted by highly qualified teachers as defined in The No Child Left Behind Act of 2001, By DECEMBER. 31, 2002, VIDE will establish a plan to increase recruitment of specialized personnel, such as speech pathologists, physical therapists, occupational therapists, etc, WIDE will prepare and work with VIDH to establish a memorandum of agreement between VIDH and VIDE ta jointly recruit and share needed specialized personnel, such as speech pathologists, physical therapists, occupational therapists, etc. The terms of such agreement need not require that either agency share personnel during any periods of time when either of the agencies is fully utilizing all of its personnel in order to meet the needs of the infants, toddlers, or children with disabilities as required under federal law and the sharing of personnel would cause one of the agencies to be out of compliance. By DECEMBER 31, 2002, the VI will determine how many highly qualified teachers it needs per program te employ to achieve the goal of having a qualified teacher in every classroom within 5 school years. In determining the number of teachers it needs, the VI will ensure ratios comparable to similar sized school districts for the (1) average number of students per teacher, (2) average number of administrators per student, and (3) percentage of Federal dollars spent directly for classroom instruction and related expenses. In addition, the VI will assign priorities to the types of teachers needed. For example, based on the previous Compliance Agreement, special education programms are currently an immediate priority for filling vacancies. As another example, high school teachers are also an wnmediate priority so that the VI high schools can regain accreditation. 2004 school year. In addition to the items set forth in the “Reporting Requirements” section of this Agreement, quarterly reports will also include each person’s date of hire, date of entry into the personnel system, date of arrival on the job, and the date of receipt of first paycheck. The report should include contact information for each new hire so that the Department staff can confirm the personnel data reports with staff members. By the beginning of the 2003-2004 school year, the VI will have implemented a process to re-engineer its personnel system and related payroll process so that all new staff hired for education programs can be deployed to classrooms within one month of being hired and receive their first paycheck within one-month of starting work. the items set forth in the “Reporting Requirements” section of this Agreement, quarterly reports will also include each person’s date of hire, date of entry inte the personnel system, date . of arrival on the job, and the date of receipt of first paycheck. The report should include contact information for each new hire so that the Department staff can confirm the personnel data reports with staff members. U.S. Virgin Islands Compliance Agreement de By MARCH 31, 2003, and based on the total aumber of qualified teachers needed aver five vears and de prienities lor types of vacancies to fill firet, the VI will set specific goals for eraploving qualitied teachers in specific clagsioams each year. The yearly goal sheadd equal 20% af the total number of qualified teachers needed within § years (Le., yearly goal = total # qualified teachers needed over 5 years/S) &. fy APRIL 36, 2003, VI wll develop an action plas w revise Bs necestary the action steps to improve the hiring. process, including the use af current legislative authonity for VIDE to byoass the personne! office, and expedite the hiring process. 7. The VE will work with the Board of Education te expedite ihe teacher certification process, melading alternative certification approaches. %. The VI will work with the Board of Vocational Education 1G expedite setting standards far teacher certifratians, including alternative certification approxches Sub-Issue 3.2: Inadequate Time Accounting and Supplanting Sub-Issue Description VIDE currently cannot adequately demonstrate that employees paid out of Federal education funds are performing work in the programs they are paid to support. This is especially an issue where empiovees spht their ime between Federal and other programs, or belween more than one Federal program. Supplanting is also an issue, which mvolves, aimply stated, using Federal funds to pay for personnel that the State should pay. The tme and attendance accounting issue is one that will be integrated across all management systems. Planning will determine which employees will work in which programs and for how much time. Budgeting will ensure that funds are appropriately available, and financial management and accounting systems will ensure that funds are appropriately spent and accounted for. Human resource information systems will be able to accurately reflect and report how employees spent their time. tdt U.S. Virgin Islands Compliance Agreement Although this issue is covered here, with other human capital issues, it is important that plans and actions to-address the problem be developed and impiemented at a systemic ievel and integrated with other thanagement systems. The objectives of addressing this issue are to ensure that (1) the salaries of employees who work under more than one Federal program are properly allocated among those programs, in accordance with accurate time distribution records, and (2) that Federal funds are not paying for personnel that the State should pay. Performance Measures far Issue 3.2 1. By March 30, 2003, all payroll registers will reflect the appropriate percentage split of time for staff funded by Federal programs. 2. By the final year of the Compliance Agreement, all time and attendance records will be computer-based and accurate. 3. By the final year of the Compliance Agreement, audits will find no instances of supplanting. Action Steps Required The following items were developed by VI staff at the December 2001 planning session and are presented here as action steps for inclusion im the plan to be developed under Action Step 1, Year I below. Time Distribution * Develop a policy & procedure in the assignment of time distribution percentage utilizing OMB Circular A-87. Make systematic adjustments as required. Establish process to manage Quarterly Fluctuations to ensure adequate allocation of time distribution and employee certifications. Conduct Job Analysis to determine allocations. Policy & procedures created. Policy approved and distributed Pre-audit test to determine compliance and adjustments needed Training and Implementation of time distribution policy and procedure. Ensure that the Department and Department of Interior (DOD) approve the system and all related forms. Accounting system will be changed to permit quarterly adjustment between budgeted and actual effort. The Department and DOI will approve PAR and semi-annual certification forms. Target an area selected for a pilot. Train employees and supervisors in the target area Implement the program in the pilot area piloted and evaluate it. ° 8 &@ & # &©§ © @ & @&@ @& «# | U.S. Virgin Islands Compliance Agreement Ed Revise training and forms and accounting program based on the pilot evaluation. ® Phase in other areas. Time and Attendance /* Review and record current procedures relative to the documentation of nme and attendance within VIDE to identi fy incensistent applications af procedures. * Analyze result of review and recommend changes and/or mprovernents 1 current process lo ensure the proper retrieval of time and attendance * Activate system enhancement program to scan source document and payroll records to minimuze record bulk and to facilitate the location of lime and attendance documents and make reconunendations regarding svetern upgrade for V1 government. ® Implement conversion to enhance svetem that will quarantee adequate documentation over emplyvee ame and attendance. (VIDE — Pilot Prograrns) Supplanting * Meeting/trammge between OMB. VIDE, the Deparment and auditors on specrie program issues to identify maintenance of effort requirements and funding levels. identify which positions are paid from which fand. Define basic service levels and optional programs in order to prevent supplanting issues. * Develop policy and procedures in accordance with OMB Circulars that would ensure that positions paid out of Federal funds would not reveal instances of supplanting. _* Provide training regarding the implementation of procedures. L® _lmplement policy. Year | Year 2 Year 3 1. By March 30, 2003, the VI will submit a revised plan = i. The tirne and attendance accounting plan will |. Management reports showing all staff to address issues related to time and attendance be umplemented by March 30, 2004. members paid with Federal funds and the accounting and supplanting. The plan will distribution of their time by funding specifically state how the time and attendance 2, Management reports showing all staff source will be submitted to the accounting procedures will be integrated with members paid with Federal finds and the Department quarterly. program related budgeting, financial management, distribution of their time by funding source planning, and persennel processes. At a minimum, will be submitted to the Department quarterly the systern will (1) be computer-based and territory- for the duration of the Compliance wide, (2) allocate time and attendance to specific Agreement beginning for the quarter ending programs, (3) ensure that maintenance of effort and Jume 30, 2004. supplanting prohibitions in each statute are met and (4) personnel records are properly archived and readily accessible. As part of the plan, the V1 will U. S. Virgin Islands Compliance Agreement benchmark other States’ (such as Florida) systerns and develop a time and attendance system that can accurately reflect tire distribution across various programs Page By September 30, 2002, the VI will develop an accurate list of employees whose time is paid in any part with Federal education funds. The list will identify each employee and the percentage of his/her time that is paid for by each Federal program The list will be provided to the Department and to each supervisor of staff whose time is so paid. 3. By September 30, 2002, each supervisor of staff whose time is paid with Federal funds will inform the staff member about how his/her time is to be allocated and accounted for. The supervisor and the staff metmiber will both sign a document that clearly states the time alloeation for the staff memiber. A cony of each document will be poowuled ta dhe Deparenest 29 part of the first Compliance Agreement quarterly report. Issue 4.0: Property Management and Procurement issue Description Procurement and property management are related issues that result in students, and teachers not having the supplies and equipment that they need. Procurement is a problem because the process takes significant time and vendors have not been paid in a timely manner. As a result, vendors have been unwilling to do business with the VI, resulting in an inability to obtain needed supplies and equipment for students and teachers. Property management is a concern because purchased items do not get to classrooms in a timely manner, fat all. Property cannot be effectively wacked and may remain in warehouses, be delivered to incorrect locations, or he stolen rather than benefiting students and teachers in classrooms. The V1 will develop and implement effective procurement and property management policies and systems that ensure (1) delivery of ordered inventory within specified timetrames for type af supply and location of vendor, (2) payment to vendors within 30 days of invoice receipt, (3) delivery of supplies and equipment, that have been tagged and entered into a tracking system, to classrooms within 3 davs of inventory receipt, and (4) security of property and supplies. U.S. Virgin Islands Compliance Agreement Sub-Issue 4.1: Property Management Sub-Issue Description The VI needs to improve its property inventory and repair/mainienance system. This is a major reasan that classrooms are under equipped. Also, hefter security measures are needed to prevent the theft of vehicles, supplies and equipment. Through this Compliance Agreement, VI's manner of managing ventory will be such that items purchased with Federal program funds can be tracked, are distributed timely, and are used for the benefit of students. This system will comply with Federal regulations, to include tageing and tracking of inventory and prompt delivery of property purchased with Federal funds to the appropriate location, so that items may be used for the purposes of the program under which they were purchased. The inventory policy will include an established procedure for replacement or payback of any tems in the inventory that cannot be located, consistent with Federal regulations. In addition, the inventory policy and system will ensure that the Property and Procurement, Finance, and Education Departments act as an integrated team on procurement issues. They will delineate between responsibilities of individual Departments (incinding at the local and State levels}, ensure efficiency and eliminate duplication of effort, and make provisions for emergency needs to ensure students’ health and safety. Ata minimum, the inventory Management system will reflect when items are ordered, when ordered items arrive, when items are logged into the systern, and when they are delivered to the intended location. In addition, the Vi will ensure that inappropriate use of equipment (for example. vehicles or computers) is penalized and that the Department is reninbursed when equipment darnage results from such use. Performance Measures for Issue 4.0 and 4.1 i. The VI will provide the Department with an inventory policy and implementation plan of the inventory management system by June 30, 2003. +. The VI will take immediate action to the extent possible to secure all property, in warehouses, schools, and other locations from larcenous behavior or inappropriate or unauthorized use. By June 30, 2003, the VI will complete all reasonable steps to secure all property, in warehouses, schools, and other locations from larcenous behavior or inappropriate or unauthorized use. 3. An inventory policy and system will be fully implemented by December 30, 2004. The policy and system will include that all property purchased with Federal program funds will be tagged, entered into a tracking system, and delivered to the appropriate location within 3 calendar days of receipt. ted oo U.S. Virgin Islands Compliance Agreement abe By March 31, 2005, all unaccounted-for iterss will etther be returned to their intended locations, or their full value will be reimbursed to the Department. By the end of the second year of the Compliance Agreement, the inventory management system will reflect minimal losses due to theft. By the end of the Compliance Agreement, audits will show minimal unaccounted-for property. Action Steps Required In December 2004, V1 stalf members identitied the action steps and timelines listed below to address inventory management issues. The table below provides further required action steps. De * & & issue memorandum from the Governor setting deadline and priority for all Departments to comply with WIN ASSETS Personal Property inventory System: VIDPP to issue supplemental guidance memorandum setting default values. VIDPP to provide technical support for WIN ASSET SYSTEM. Determune and seek funding for human and other resources needed to establish, Taaintans, inspect, test and reconcile data in WIN ASSETS System. Determine individual departmental comphance with WIN ASSETS Personal Property Inventory System implementation deadline. By Convert mdrvidual Department inventories to WIN ASSETS format (where necessary) and upload departmental data to VIDPP system. By VIDPP to conduct meetings with mdividual Departments about the process for maintaining government-wide inventories on the WIN ASSETS system. VIDPP to issue Inventory Management Procedures Manual. (Establishes ongoing procedures and timing for reporting acquisitions and dispositions -- point at which assets are added to inventory, mandatory minimum fields for data entry, tagging and tracking assets, reconciling physical inventones to departmental purchase orders.) Ougoing. Department of Finance to provide quarterly record of 25600 capital outlay expendinae reports, VEOPP to reconcile FMS expenditures to WIN ASSETS inventory acquisitions quarterly VIDPP to conduct on site tests and tagging of personal property inventories submitted by individual Departments. Ongoing. VIDPP MIS to periodically upload departmental inventories, analytically review data base for various governmental purposes and to test accuracy, modify program for departmental and program needs, maintain codes and data classification for changes in legislation and governmental reorganizations. Ongoing and quarterly. VIDPP to conduct training on WIN ASSETS and inventory procedures for designated individuals from all Departments. U.S. Virgin Islands Compliance Agreement Year | Year 2 Year 3 ed The VI will revise the steps and timelines of the plan above as they deem necessary and provide the ’ Department with an inventory policy and implementation plan of the inventory management system by June 30, 2003. The VI will benchmark other States’ inventory management policies and systems, or engage a consultant, to ensure that their planned policy and system will deliver intended results and. that their implementation time lines are reasonable. By June 30, 2003, the VI will secure all property, in warehouses, schools, and other locations from larcenous behavior or inappropriate or unauthorized use. Such steps will include controlling access to school buildings, property supply houses, and official vehicle parking lots, and controlling and tracking access to specific equipment. The VI may wish to benchmark inventory security procedures with other States, or to engage a contractor to supply or consult on security issues. ia x By December 31, 2003, the VI will begin collecting data on items purchased with Federal funds from ED. On March 30, 2004 and every six months thereafter until the conclusion of the Compliance Agreement, the VI will provide the Department with management reports that show, at a minim, all items ordered, when the items were ordered, when ordered items arrive, when the iterns were logged into the system, and when the items were delivered to the intended locations. Documents to verify the management reports, including copies of equipment and supply orders, vendor delivery statements, tacking data, and signed receipts showing delivery to schools, will accompany the managerment reports until the Department deems that such verification data are no longer necessary. Within three months after full deployment of the new inventory managernent system (and no later than December 31, 2004), the VI will provide the Department with a list of items paid for with Federal funds that are not in service in classrooms (i.¢., lost, stolen, or insproperly deployed items). Within 6 months after full deployment of the new miventory management system (and no later than March 31, 2005), the VI will (1) return improperly deployed, lost, or stolen items to their intended locations as possible, (2) provide the Department with a report of items and their values that are still not properly in service in intended locations, and (3) reimburse the Department for the items that have not been returned properly to service. The VI may wish to post a lost property notice in media outlets, and/or offer rewards for information leading to return of property. The inventory management system will be fully implemented by December 30, 2004. had U.S. Virgin Islands Compliance Agreement Sub-Issue 4.2: Competitive Procurement (Improved Process) Sub-Issue Description The current competitive procurement and contract process takes too long and does not ensure that vendors (contractors) for school services are hired and are paid on time. The VI will develop a new competitive procurement policy and process that ensures that school services, supplies, equipment and other necessary resources are provided and in classrooms when they are needed. The policy and process will also ensure that vendors are paid within 30 days of invoice receipt. In addition to the items noted above, the procurement management process will include procedures for flexible, timely contractual arrangements, sole source contracts, contract closeout activity, including receipt of goods certification, contracts release, and review of final payment. "In December 2001, VI staff developed the time lines listed in the table below for procurement, vendor payments, and delivery of supplies or _ equipment to end users. The procurement policy and process will ensure that the time lines are met in all instances by the conclusion of the Compliance Agreement , Procurements Department of Education from central supply sources in 2 days — 1 week On island purchases < $5,000 in 2 weeks On island purchases > $5,000 in 3 weeks after receipt by the Department of Property and Procurement Off island purchases < 3-4 weeks after receipt by the Department of Property and Procurement Off island delivery of purchased iterns < 2 months 2 £2 © & # Payment of Invoices « Payment of invoices after receipt of acceptable goods or services in 20 — 30 days Delivery of Supplies or Equipment « Delivery of received items to school, activity center, or school district in 3 days from receipt Performance Measures for Issue 4.2 |. The VI will provide the Department with a procurement policy and implementation plan of the procurement management process by June 30, 2003. 2. A procurement policy and process will be fully implemented by September 30, 2004. Scant By September 30, 2003, the VI will revise the system of requiring 3 bids for each and every item submitted on a requisition to reduce the time needed to obtain required items to meet the procurement time lines noted above. U.S. Virgin Islands Compliance Agreement 4. By September 30, 2003, the VI will develop and maintain a short-term emergency by-pass authority/option for items that cost less than $10,000. 5. By the conclusion of the Compliance Agreement, the VI will receive all procurements purchased with Federal education program funds within the timeframes listed in the table above. & By the conclusion of the Compliance Agreement, the VI will pay vendors for all procurements related to education program within 30 days of receipt of the vendor’s invoice. Action Steps Required In December 2001, VI staff members identified the following action steps and timelines to address competitive procurement issues and to meet the timelines listed in the table abave. * © & es ££ &£ &@ «@ © &© & & BP &@ & & Flow chart new process. List key players and produce directory. Convene working committee meetings (all stakeholders). Monthly and ongoing. Develop effective document transmittal process, standardized forms, system changes specified, record retention policy, competition requirements, vendor certification and representations including eligibility, responsibilities redefined, personnel analysis, and reallocation recommendation. Prepare new government policies, procedures, and regulations. Review and approval of new policies, procedures and regulations. Distribute and provide orientation to stakeholders on new policies, procedures, and regulations. Establish improved interagency cormmunication and cormmitment. Hire needed personnel. Train all stakeholders and responsible personnel. Build accountability and timelines into personnel system. Pilot implementation of new policies, procedures, & regulations. Full implementation of new policies, procedures & regulations. Fully automate requisition, purchase order, and contract writing process. Conduct periodic process review, identifying deficiencies and implementing continuous improvement actions. Ongoing. Full and effective implementation of new process. Ongoing. Establish review protocol for contracts such that VIOG and VIDJ review only selected contracts. end U.S. Virgin Islands Compliance Agreement Year 1 Year 2 Year 3 rs The VI will revise the steps and timelines of the December 200i plan as they deer necessary and provide the Department with a procurement policy and implementation plan of the procurement management process by September 30, 2003. At the start of the Compliance Agreement, the VI will begin collecting data on, iteris procured for education programs to develop baseline measures of the procurement process. gat The procurement management process will be fully implemented by September 30, 2004, By June 30, 2003, the VI will revise the system of requiring 3 bids for each and every item submitted on a requisition to reduce the time needed to obtain required items to meet the procurement tune lines noted above. By Tune 30, 2003, the VI will develop and maintain a short-term emergency by-pass authority/option for items that cost less than $10,000. VI's procurement policy and process will mest the time lines for procurement, vendor payments, and delivery of supplies or equipment to end users by the conclusion of the Compliance Agreement. U.S. Virgin Islands Compliance Agreement The parties agree to faithfully carry out the terms of this compliance agreement as set forth above Far the U, ie? Islan Me “te Date Sept g: Noreen Michael Fat D, Commissioner, Department of Education eet sss saree i ae “Ww, Gree tng Bon! ee) Date UW LEZ Mavi is L. ithew, » MPH Com issioner, Deparment g Fealth durti. M Bernice A. Turnbull pate 7/6 fo 2- Commissioner, Department of Finance Cyr. CS, fra Mills Date: J/ ¢ [or Director, Office of Management and Budget a A Date eli for a A, \caqnendssioner, Departament of “Property and Procurenent sre 2 we i ot — fy ey | fiir, Date 3 / oo jo e U, Barry fo a AY Personne ry Oveee. 2/1. P- Che at, 64, 2. Virgin isl Bears ra Sonnet net tS Tage, Date liar i Trgin slands Board of Vocational Education be tA Ny Date ba Chark les W. Tumbull Governor of the Virgin Islands Approved © legal uffic ici micy a at the V.L. Department of Justice: Le £ cartier sani anata Date. Oe er a S iron Attorney General aan U.S. Virgin Islands Compliance Agreement For the U.S. Department of Education Office of the Chief Financial Officer Office of Elementary and Secondary Education \ Le phar. Ve Weed Jagk Martire. an B. Neuman, Ed.D Chief Financial Officer Assistant Secretary and Rehabilitative Services Office of English Language Acquisition, Language _- ‘of § ial ay tig Enhancement, and Academic Achievement for Limited English L Ei nun Proficient Students ie al: H. Pasternack, Ph.D. oy Assistant Secretary ee ae ae a ALeee ee ae Ma is! Hernandez Ferrier, Ed.D. Direttor fe Office of Vocational and Adult Education oe i oh - as 6, o ? e ra a ie ro é on BE, tml SEP 23 20 # i FA Carol D’ Amico Assistant Secretary 36