Archived Information

Grants and Other Financial Assistance Programs: FY2007

NCLB Flexibility Provisions Transferability of Funds

Under Subpart 2 of Part A of Title VI of the No Child Left Behind Act of 2001, districts that have not been identified as in need of improvement are allowed to treat (transfer) up to 50% of funds received under certain programs as if received under other programs. Districts that have been identified for improvement are limited to the treatment of no more than 30% of funds in this manner. Districts that have been identified for corrective action may not transfer any funds.

These transfers are permitted among any of the following programs:

140 - Title II, Part A	Improving Educator Quality
160 - Title II, Part D	Enhancing Education Through Technology
331 - Title IV, Part A	Safe and Drug-Free Schools and Communities
302 - Title V	Innovative Programs

In addition, funds from any of these programs may be used in support of Title I. However, Title I funds cannot be used (transferred) for any other program.

This transferability provision applies whether a district files a consolidated application or submits the program grants individually.

Although this provision allows funds under one Title to be expended to support activities under another Title, there are some key points to keep in mind. Districts are advised to consult with the respective Department program contact if there are questions regarding any of the following:

1. Each program may have minimum set-aside provisions that must be addressed before transferring support to another title (e.g., Title II, Part D requires that 25% of a district's allocation be expended for professional development).

2. Funds that are transferred must be spent in accordance with the specific expenditure requirements of the new program Title.

3. The district must notify the Department of its intent to transfer funds at least 30 days before the effective date of the transfer and provide copies of the amended plans no later than 30 days after the date of the transfer.

4. Each of the programs covered by this transferability authority is subject to the requirements for equitable participation of private school students and staff. Before a district may transfer any funds, it must engage in timely and meaningful consultation with private school officials. However, a district may not transfer funds to a particular program solely to provide services for private school students and/or educators. Instead, the district must provide equitable services to private school students and educators from the overall funds of a program, including the transferred funds.

5. Federal and state grant administrative requirements do not allow the commingling of program funds. The actual funds remain in the original grant and separate records must be kept detailing the use of each program's funds.

Given the requirements that transferred funds must remain in the original grant, how is the transfer accomplished?

In the process of developing the program plan(s), the district may determine that there is a need for more funding for certain activities in one program than in other programs. The individual program budget and budget narrative should be written to reflect the planned expenditures.

Example 1

A district has a Title IV allocation of $100,000. During the planning stage, it is determined that the district would be better served if 50% of the Title IV funds were used to purchase supplies and materials under Title V, Part A, which also has a $100,000 allocation.

The detailed budget for Title IV will still total $100,000 but it should have at least 50% of the total allocation written into the supply line item (#6) and the program plan and budget narrative should state that this funding is for Title V, Part A supplies.

The detailed budget for Title V, Part A will also total $100,000 but the program plan and budget narrative should state that an additional $50,000 of support for supplies and materials is available from Title IV funds.

It may be that the decision to transfer funds comes later in the year after the initial plans and budgets have been approved. In this case, the affected budgets, budget narratives, and plans would have to be amended to reflect the change in priorities. The required consultation with private schools must take place before the changes are made.

Example 2

It is decided that some portion (up to 50%) of funds from the four (4) applicable Titles is needed in Title I in several different areas. The budget, budget narratives, and plans for each affected program will have to be amended accordingly.

Again, the actual funds remain and are accounted for in the original grants. The line item budget for each program may have to be amended to show where the expenditures in support of Title I will be made.

The budget narrative for each contributing grant would have to be amended to indicate how many dollars and in what areas funds will now be used to support Title I activities.

The program plans for each contributing grant will have to be amended to explain the need to treat the program funds as if they were Title I monies.

For more discussion of the transferability provisions, see:

www.ed.gov/flexibility/transferabilityguidance.doc