Mayra Diaz: All right, thank you. I don't know if we have the PowerPoint available to share.

Speaker: Yes, I will share right now.

Mayra Diaz: All right. Well, good afternoon, everyone. Thank you for joining us. I think it's officially 12:00, so we can say good afternoon and thank you for joining us during your lunchtime today to listen in on this long-awaited AB 1491 presentation. As we get this presentation up and loaded, we'll be going over the agenda and just covering what our focus for today will be on AB 1491. [inaudible] And next slide, please.

So, for today's presentation, we'll be doing some introductions and we'll be focusing on AB 1491 overview. My partner, Neil, will be focusing on AB 1491 member carryover. And then I'll transition off to cover the AB 1491 consortia carryover.

We have support from our CAEP TAP and Veronica, who will be assisting us with covering information on our tools that we will be deploying and have available for tracking on this AB 1491 legislation. We'll go over a timeline. And at the end, we will open it up for questions. Next slide, please.

So to kick this off, as you all know, may already know, my name is Mayra Diaz. I am the program lead with the Chancellor's Office. And I have with me today Neil and Veronica. I'll let them introduce themselves.

Neil Kelly: Neil Kelly from Department of Education.

Veronica Parker: Veronica Parker, coordinator with the CAP Technical Assistance Project. Good afternoon, everyone.

Mayra Diaz: So, thank you. Next slide, please. So to kick this off, we'll be providing an overview of, really, what we'll be engaging on and talking about for the next hour and a half, which is the impacts of Education Code 84901 and 84914, which is our AB 1491 legislation.

So to highlight a few important aspects to what we will be talking about today, tracking for this AB 1491 carryover is officially going to begin with fiscal year or program year '23-24. This update to the legislation addresses actions related to carryover of funds from a previous fiscal year to the next. There are two main aspects to this carryover legislation that can impact members and consortia differently. On the member side, members will vote to set a carryover percentage threshold within their consortia. Also, members' funding for one year may be impacted after two years are assessed if they are found to have excessive carryover.

At the consortia level-- which is what I will be referring to as that second-tier level that we will be monitoring-- if consortia exceed a 20% carryover annually, they will be monitored by the Chancellor's Office in the California Department of Education. So for any consortia that does exceed that 20% carryover annually, they will be required to submit a written expenditure plan and will be assigned technical assistance by both agencies. Next slide, please. And I'll hand it over to Neil.

Neil Kelly: All right. Thanks, Mayra. For those of you who are old enough to remember the Members Only jacket, we're going to go into the member carryover. So with that, I don't have my Members Only jacket, but I probably have it in the closet. But, anyway. Next slide, please.

All right, so let's-- I just wanted to say upfront, before this legislation, we did have a few consortia that had carryover bylaws. And so your consortia could have done this all along, as long as you had member agreement. And so remember, that when we go through 1491, for member carryover, you still have to get member agreement. So nothing's really changed there. But legislation does put some guidance and some parameters around that. So--

How's that, Veronica? Is this better? I'll get closer to the--

Veronica Parker: Yeah. Your speaker is moving from your headset, and so it's obstructing your sound.

Neil Kelly: OK. I just-- I'm talking into a laptop. So is that better? Or maybe it's same?

Veronica Parker: A little.

Neil Kelly: Hm.

Mayra Diaz: That's better.

Neil Kelly: Is that better?

Mayra Diaz: Yeah.

Neil Kelly: OK, I'll get a little closer. All right, so like I said, the new legislation just puts parameters around that. But this is something you already could have been doing. In fact, we did have a few consortia that were already doing that.

So let's look at the legislation for members. It says AB 1491 would authorize a consortia to reduce a member's allocation by no more than the amount of the member's carryover. So it authorizes, it doesn't mandate. So you don't really have to do this if you don't want to or your members don't agree to it. That's for the member.

Mayra will get into the consortia, which is not something that you can choose not to do. That's at a state level. But she'll get into that briefly. And then you can only reduce funds by no more than the carryover. You cannot go into the member's base, only the carryover. And that's up to you to decide how much of that carryover to reduce. So next slide, please.

And then a couple of other things to remember, and I bolded it there. If the consortium makes a finding by a majority vote, based on a member having excessive carryover for at least two consecutive fiscal years beginning with 2023-24, meaning after Q4 is certified this year and we get into the next fiscal year of 2023-24, then we start tracking this. A consortia is authorized to reduce a member's allocation by no more than the percentage of the member's carryover. So we're going to talk a little bit about what majority vote means, what excessive carryover means, and what is the percentage of the member's carryover to be reduced. Those are some key terms that I'll unpack right now. Next slide, please.

OK, so just remember it has to be a majority vote. Excessive carryover is determined by each consortium, so-- consortia-- so you might have one consortia say, our excessive carryover is going to be 50%. And then you could have another consortia to determine that their excessive carry is going to be 20%. And so it'll vary around the state, depending on the consortium and how they determine what excessive carryover is. So there is no uniform percentage. It's up to you guys to decide.

And then, of course, for the members, it has to be two consecutive fiscal years, and Mayra is going to show you in NOVA how there are some tools that we can track or tools that we're working on so you can see who's on track to maybe get one consecutive year or after this first year, who has exceeded it for the first year and might be on track to get two consecutive years. So we have those tools that we're building in the NOVA, and she'll talk about that in a little bit.

Funds may be reduced by no more than the carryover. The amount could be-- you could reduce all of the carryover or you could reduce a small percentage. It's up to you to determine the amount of the carryover to be reduced. And I have an example that I'm going to walk everybody through so you can see the kind of decisions that you'll have to make on the carryover conversation once you get into this. And then the fund reduction is for that fiscal year and does not impact base. Like I said earlier, it doesn't affect your base funding going forward, it just affects the carryover.

And then, of course, the majority vote takes place once Q4 is certified. So when those numbers get updated at the end of the second year, if you have a member that has already one consecutive year and you're into the second year, and you certify it and they came up again exceeding the unique excessive carryover percentage that your consortium agreed to, then you would vote to see, based on your bylaws, how much you would reduce that member's funding, the carryover. So next slide, please.

OK, just a reminder-- so carryover tracking begins '23-24 fiscal year once Q4 is certified. And so, as you know, members certify their Q4 on September 1st and consortia certifies it by the end of the month. So technically, we'd be tracking this starting after Q4 of '22-23. We track it for the full year. And then once 2023-24 Q4 is certified, then we would know first who has exceeded the consortia-determined member carryover percentage for year one, and then we would also know that-- Mayra will get into-- which consortia has exceeded the 20% for the initial year. And she'll explain that it's only one year and what goes into that decision and that process.

And then the start date for tracking member carryover and consortia carryover is the same. We're going to start at the end of Q4 this year, starting with expenditures accumulating, I guess, July 1 of 2023 going to June 30th of 2024 after you certify Q4 of next year. So next slide, please.

Speaker: Uh, Neil?

Neil Kelly: Yes?

Speaker: There is a question in the chat before we move on from Paul. And he states, so remaining funds from '22-23 that became carryover in '23-24 are part of the year one carryover determination?

Neil Kelly: So when-- this is what will happen. So when we get to Q4 next year, all active funds-- so we have this year-- I think it's '21-22 CAEP funds will be expiring at the end of December. So then, going into Q4 of next year you'll have 20-- let's see, '22-23, '23-24. I may have to look at that. But Paul, it's all active funds. So whatever you're carrying over from prior year or prior-prior year would be considered in that excessive carryover.

So if you're-- and I think I have an example of this-- if your base funding is $1 million and you're carrying over 50% more of $1.5 million, then that carryover of $500,000 would be subject to whatever rules your consortia comes up with. So we would-- and let's say that $500,000 is based on $400,000 from prior year and $100,000 from prior-prior year. And so all those active funds would be considered in the excessive carryover. I don't know if I answered his question though. OK.

Mayra Diaz: That's correct. It just-- it's an aggregate carryover balance. So yeah, you did cover it, Neil.

Neil Kelly: OK. Next slide, please. All right, so let's talk about excessive member carryover. Excessive member carryover is not defined in legislation. So like I said, each individual consortia may uniquely define excessive member carryover as a specific percentage of unspent funds from the prior year or prior-prior year. So you'll go into NOVA and put that unique excessive member carryover percentage. And so NOVA will track each of your members to see how you're doing against that unique percentage of excessive carryover.

And like I said, that will vary from each consortium as far as what you decide that excessive carryover amount or percentage is. So this percentage becomes the consortia threshold for determining which members meet or exceed the excessive carryover. So it's up to you guys to figure that out and agree to what that amount should be.

Let's see-- and then each consortia defines their percentage annually, starting in '23-24. So Mayra and Veronica will go over this-- when you submit your CFAD this year-- because that's for '23-24-- you will have to decide what your unique excessive carryover amount is, and that will be tracked through the whole year of '23-24 for all your members. So you have an option.

You can say, no, we're not going to do it this year and I'm going to rely on the state's 20%. Or we're going to say, hey, we're going to come up with our own for members, and we're going to go with 15% or we're going to go with 30% So it's up to you what you decide. And, yes, I do have an example coming up. So next slide, please.

OK, and then just a reminder-- the majority membership vote, membership as defined in Ed code is community college district, school district, county office, or GPA, located within the boundaries of the adult education region. And then it's one vote, one member when reducing member carryover. Next slide, please.

And then just a little reminder on the carryover reduction amount. It says no more than the amount of the member's carryover as certified in Q4 of the previous fiscal year. The bill doesn't specify a percentage or an amount, so the consortia-- or all the consortia-- will have to decide how much of a reduction is appropriate based on the percentage threshold.

So you might have an excessive carryover percentage for members at 20%. And so when you get to that 20%, how much of that is going to be reduced? You might say all of it, or you might say, oh, we're only going to reduce half. Or you might say, OK, we're going to let-- with some kind of plan, we're going to let the consortia keep a percentage of that, but the rest will be reallocated based on what we agreed upon.

So you might want to think about what your process is and your bylaws for reallocating that. Is it going to go to consortia-wide projects? Is it going to stay in that community, so we don't take the money away from the students that are being served in that community? So is another adjacent member going to benefit from that? So all those things need to be considered when you reduce a member's carryover amount of what you're going to do with that money, and it should be up front so everybody knows what's going to happen if a member gets their funding reduced. So next slide, please.

And then, as I've said before, a vote to reduce a member's carryover will affect the prior year carryover only or prior-prior year, not future allocations or base funding. OK, next slide, please.

And then, just the last reminder-- here's the process beginning in '23-24. Consortia will track member carryover to determine if a member has excessive carryover for at least two consecutive years. Excessive carryover is determined by the individual consortia, would be based on certification of Q4 in NOVA. Members certify September 1st, then the consortia certify September 30th.

Members must offer members locally-determined technical assistance to help prevent them from having two consecutive fiscal years of carryover. So that's another thing, you'll have to determine what is that technical assistance and reasonable intervention, and how far in advance did you offer it to that member before they came up with two consecutive years? You should be really offering that technical assistance in year one if they look like they're going to have at least one consecutive year. Maybe you can help avoid that. But then definitely, in year two, you should offer that technical assistance to avoid the second consecutive year. And, of course, TAP will be available to help you, as well as whatever local process you come up with.

And then lastly, if the consortia determines that a member has excessive carryover for the two consecutive years and a reasonable intervention hasn't eliminated the carryover, then the consortia can reduce the member's carryover with a majority vote. OK, so next slide, please.

- And before we just go into the next slide, Neil, there was a question about base funding from Kelly Henwood, asking define base funding. Is it allocation from which year?

Neil Kelly: So that would be-- the base funding is your allocation from prior year. So let's say you got $5 million last year and the budget's good for the state, then you automatically get that $5 million. If the state decides to give you a COLA, you also get that COLA. So you can't take that away, but what you can take away is any excessive carryover from prior years if you agree to a unique excessive carryover amount and you agree to how much of the carryover to be reduced. So that's on the consortia.

So the base is that prior year funding that you automatically gets re-benched every year if we get a COLA. So this year, we got a COLA, so that would re-bench our base funding. So going into next year, you'd get a higher amount and that's safe. You can't reduce it with this carryover legislation. Did I answer that? Were there any other-- because I think I have the example coming up. Were there any other questions that I needed to answer?

Speaker: Yes, so earlier there was a question from Kelly Henwood asking how about the FIFO? How will this help them? That was when they were talking about the aggregate carryover balance.

Neil Kelly: So, with FIFO, it's kind of the same thing. I mean, we'll get into that. It gets a little confusing with FIFO, but you'll just see which remaining active funds you have. You'll see if you have funding from prior-prior year and funding from last year or prior year. And that will show you how much carryover potentially you could be working on throughout the year.

Because the way NOVA works, it spends the oldest funds first. So if you have money that's two years old, any expenses you certify are going to spend down that oldest money first. So that liquidates part of your carryover. And then once you liquidate that prior-prior year, then it starts working on the prior year, the last year. And once that's liquidated, then it starts working on current year, if that makes sense.

Speaker: Thank you.

Neil Kelly: So there'll be reports in NOVA that will help you track this. And so you can see where you're at. And like Mayra said, they'll be available soon. Anything else before I get into the example?

- Yes. So sorry, my chat just jumped on me. But there was another question from Keshaun. What happened to not more than 20% carryover that I heard before?

Neil Kelly: OK, that was the old-- I don't know, AB 104, the old CAEP before the legislation. We had targets of 20% by Q1, 40% by Q2, 60% by Q3, and 80% by Q4 with the remaining 20% was OK to bring over. And that was before we had carryover legislation. And so with carryover legislation, it kind of still aligns that with the consortia carryover with the 20% that Mayra will talk about.

But as a consortia for members, you can go below that. You can go above that. It's really up to you. So we're not-- we took that out of the program guidance because we're no longer setting that target as a mandate. But we could still use that for the consortia carryover, and that's something we're thinking about, depending on the tools that we have available in NOVA.

So the 20% is still pertinent for the consortia discussion. For the member discussion, that's up to you guys to determine what your excessive carryover would be.

Speaker: And then, Neil, that leads to Shannon Eller's question-- can we change the quote, unquote "excessive" definition from year to year?

Neil Kelly: Yeah, I'm going to show that in your examples. So you could go like this year, this coming year, in your CFAD, and you're like, oh, we're not sure. We need more time. So we're going to go with 50%. And then after a year, you're feeling more comfortable. Then next year, when you're certifying your CFAD, you could go down to 15% when you feel more comfortable.

So you have the ability every year when you certify your CFAD-- and Veronica will show you this-- you can update your excessive carryover amount. It could get a little confusing because you might have a member that exceeded year one at 25% and then you change it for year two at 15%, and they could still exceed year two, so that would be two consecutive years. But it could be a little difficult to track, but, I mean, not impossible. So you do have that flexibility

Speaker: OK, we have a couple more questions in the chat, Neil.

Neil Kelly: OK.

Speaker: Susan Wynn asks if 20% carryover applies to the consortia reporting as a whole, it is still a requirement?

Neil Kelly: Yes, the 20% for the consortia. Yeah, based on the legislation.

Speaker: And then Emma Diaz says when the fiscal manage-- when will the fiscal management guidance be updated? What are you saying, Neil, was in the previous guide of 15% spent each quarter?

Neil Kelly: Yeah, so that was updated, and, Veronica, did we post that yet, the new guidance, the updated guidance? Oh, it was emailed out yesterday. So no--

[interposing voices]

Neil Kelly: OK. So we have the new guidance out there. We took out some of the old targets because now we have more legislative parameters. So to speak for the consortia, like Susan was saying, it's at 20%.

Speaker: And Karima posted the link in the chat. Thank you.

Neil Kelly: And then Nikki says, so a single member could go higher than 20% as long as it does not push the consortia as a whole? I mean, you can decide whatever you want. You can say we're not going to do a member carryover but you still run the risk of the 20% for the whole consortia. So you might want to think about that.

Are we going to run the risk of going over 20% as a consortia if we don't do anything internally for our members? Maybe you'll be OK. But you have to look at past history and spending to make that decision as a consortium of what you want to do for member carryover.

- OK. So there are a few more questions filtering in. Do you want to look at those Neil or would you like to move on and then maybe come back to those?

Neil Kelly: Yeah, I think Andreana's question-- Adrian's question about takeaway means reduce or reallocate. OK, so let's go to the next slide.

And so here's a reminder of some bylaws that you probably want to start considering-- agreement on percentage of member carryover that will be defined as excessive, agreement on percentage of member carryover that will be reduced, your decision-making majority voting process to reduce member carryover, and then what your definition of technical assistance / reasonable intervention will be to avoid help avoid a member from carryover finding, so to speak. OK, next slide, please.

So let's get an example. I call this the Adult Ed Outside Consortium because I couldn't come up with anything better. Conservancy has five members. They make decisions based on consensus, but if they have to, they'll use majority vote.

So next month in April, the consortium has a public meeting and they decide on the consortium excessive carryover percentage. They make a decision on the percentage to be reduced if a member has two consecutive years of carryover.

They agree upon the technical assistance process. And they agree to when the carryover updates will happen. They will happen on a quarterly basis. And then, of course, they agree to add these bylaw updates. So let's go to the next slide for the next month.

Oh, and so they also decided that excessive carryover percentage will be 20%, and so that's a bylaw. And they'll set up their spending targets as such. Q1 will be 10%, Q2 40%, Q3 60%, Q4 80%, leaving that 20% as the excessive carryover, so you can have up to 20% of excessive carryover. So each quarter they will look at their spending rate to see how they're doing so they can get to that 80% or more and so they don't hit that excessive carryover for year one. Next slide, please.

So after all those decisions, they also agree that the members with two consecutive years of carryover will be 100%. So they're taking all the carryover. But they had a caveat saying of that carryover that we're taking the 100%. 75% of the member carryover will be reallocated based on the three year-plan and member approval. And then the other 25% may be retained by the member that's being reduced if their carryover plan has been approved by the consortium members.

So they're giving that member an opportunity to take some back, based on a plan that they come forward with. So they're getting a little creative here. They're coming up with maybe a way for that member maybe to plead their case, and if it gets passed by the consortium members, that it would be retained.

Now, you could also have your own bylaws that state we might have a member that's going to refurbish a building or they're saving money to do a retrofit. And so they're going to be over the 20%, or they're going to be over whatever the excessive carryover definition is. So then you would be OK with that because everybody agreed to that, and so they wouldn't get that money taken away. So those are the kind of things you have to consider when you're drafting your bylaws and figuring out the successive member carryover. Because there might be certain projects that might take a long time that you would have to agree upon, like, we're OK with this, that we wouldn't vote to reduce their funding because we're OK.

Also, this could come up in the majority vote. Some members would say, hey, I thought we already agreed that this member was going to do this building retrofit, so I agree not to take the money away. I mean, you can have it happen like that or there could be an agreement in advance. So it's really up to you of what you want to put in your bylaws that govern this because it's really your decision on making that excessive carryover amount and that excessive carryover decision. OK, so next slide, please.

Speaker: Neil, there's a quick question from John Werner. Do we have any-- or do we have any bylaw template language for each of these concepts?

Neil Kelly: Not yet, but I think we're going to have a webinar about it, aren't we, sometime later this year?

Mayra Diaz: Yeah, we are working on putting out a series of webinar trainings. I think one is going to touch on the bylaws and then also an additional one, probably around May or so, that will actually focus on the tools that the consortia and the members will be able to use to track the monitoring of this carryover.

Neil Kelly: All right. So moving right along into May, this is when you certify your CFAD. You're also going to be certifying your excessive carryover percentage for the next year. And so, I think Mayra and Veronica will show you how that happens in NOVA.

So then we get into September. We're certifying Q4 for this year, and that will kick off after you certify Q4. Then I'll start tracking your expenses for '23-24, which means that'll be when the carryover clock starts ticking. So on December 1st, 2023, members submit their Q1. For '23-24, the consortia certifies.

So then by Q1, you'll kind of know those first reportable expenses that will go against the carryover amount. And you kind of start seeing who has a lot of carryover. You might already know that. But that could kick off kind of the carryover season or cycle. Next slide, please.

So then after Q1 and Q2, consortia and their members review how each member is progressing towards their spending targets. If members are falling short, then the agreed-upon-- falling short of the agreed-upon spending target, then technical assistance can be offered after Q3. If technical assistance isn't working, you might start having discussions about allocation amendments or more technical assistance to avoid excessive carryover findings. So all that could be happening by Q3. Next slide, please.

And then right around that same time, in May of 2024, you have to certify the CFAD for '24-25, and you might want to update your consortia excessive carryover percentage. And in this case, this consortia decided to go from 20% down to 15%. And so year one was 20%. Year two is 15%.

And so then we get to Q4 and the consortia and members certify, and members that exceeded the consortia upon 20% from '23-24 are highlighted in NOVA. NOVA will automatically highlight them as exceeding one or more consecutive years. So next slide, please.

And then throughout the next year, '24-25, you're going through the same process, monitoring quarterly expenditure reports, providing technical assistance. By Q2 or Q3, you're having those discussions about allocation amendments as a possible option to forego those members that are having excessive carryover, maybe for one year because maybe they're looking at having carryover-- excessive carryover for '24-25. Or you have those members that in '23-24 had excessive carryover and they're still, with all that technical assistance and discussion, still on track to have excessive carryover in '24-25.

So there could be discussions then-- maybe moving money around so you don't want to go to that vote. Maybe you come up with an agreed-upon plan. So it's really flexible as far as how you want to deal with this. And then lastly, once consortia members certify Q4, members with two consecutive years will be voted on by consortium members for possible funding reduction. So I think-- next slide, please.

I think there's just-- oh, voting results, majority vote. Consortia must follow the carryover bylaws on how much to be reduced. Consortia will certify in NOVA the reduction via the allocation amendment. CAEP funds will be transferred to reflect the reduction in NOVA.

So if you are doing allocation amendments, if you're direct funded, you will have to physically move that money around because NOVA does not move the money around. It's just a tracking system dashboard. And so if you had a fiscal agent, they could do that. But if you're direct funded, you'd have to work that out at the local level of moving money from one account to another for an allocation amendment. And I think I have one more slide.

And here are some takeaways. Just please be clear on your governance on how you plan to implement this legislation, track members, and assess annually and often, maybe quarterly. Offer interventions, vote on possible one-time carryover reductions or allocation amendments before it gets to a carryover vote. You'll have to fill in the gaps on how much to be reduced.

The voting process, those check-ins, what's that timetable look like, and how to utilize any reallocated carryover funds-- where is that going? Who gets it? Does it stay in the local area? That kind of thing. And then, of course, members can use tools in NOVA and technical assistance from TAP as they become available.

And then lastly, there are some risks by doing nothing. So if you choose not to participate, then you still have to monitor your 20% carryover and see that you don't exceed that. And that's after the first year, and Mayra is going to go into that a little bit. So with that, I will dive into the chat while I turn this over to Mayra. I think this is my last slide. Yep.

Mayra Diaz: Awesome. Thank you, Neil. So we're going to turn it over to start talking about the second-tier level of monitoring that will be occurring, which is the consortia carryover. So as we get ready to transition and talk about the impact on consortium carryover, I just wanted to highlight the objective to this member carryover conversation.

I really want to ensure that each member is ultimately spending down the CAEP funds that they're entitled to serve the students in their programs in their respective region. Also that the consortia work to-- work with its members by providing technical support as a first level of intervention to ensure they're addressing that excessive member carryover. So we'll transition. Next slide, please.

So AB 1491 for the consortium and what that means is AB 1491 requires a consortium with carryover from one or more prior fiscal years exceeding the 20% carryover to submit an expenditure plan to the chancellor and the superintendent. What will follow is the prescribing and assigning of technical assistance to that consortium to ensure that adequate adult education services are provided to the region in proportion to the region's available funding. So this is where the 20% is actually called out, and it will be at the consortia level.

So really, the consortia would want to work with its members to ensure that carryover at the member level is closely monitored and spent down. Otherwise, the consortia will be flagged by the chancellor and the superintendent and those additional steps that we will outline further will follow. Next slide, please.

So some key terms that we'll be talking about in regards to consortia carryover. The start date-- it should align with the member carryover start date. How we're calculating the 20% carryover, what is the written expenditure plan and the technical assistance that will follow, and what will be the consortia carryover reduction process? Next slide, please.

So the start date for consortia carryover aligns with the member carryover tracking. So this is going to begin in program year '23-24, and that is once Q4 is certified. So the start date is for tracking member carryover and the consortia carryover. And that will be in '23-24.

So I know there's a lot of questions in the chat and concerns in the chat, and that's where what we're going to be able to present to you today with what is currently available in NOVA. Just rest assured that we're working to try and meet those timelines that you're working on as well. But since we know that, as far as the tracking and those tools, that is where we were able to actually start this in '23-24 as opposed to '22-23. So next slide, please.

So calculating the 20% consortia carryover-- the consortia carryover is one or more prior fiscal years exceeding 20%, and this is assessed and acted upon annually. So the distinction to this, as opposed to what was addressed in prior slides on the member carryover, is that for the consortia, we will actually be looking at this on an annual basis. And it is once the consortia reaches that 20% threshold carryover that consortia will be flagged.

There are tools that are going to be in place in NOVA to capture this. And that is where it is important that the consortia is monitoring the member carryover and that the members are focusing as well on their own carryover. Because ultimately, if that carryover continues and it's not on a two-year basis but rather on an annual basis, that will flag the consortia to reach that 20% carryover, which will then be looked at by the state. Next slide, please.

So here is an example of the consortia carryover. So if a consortia receives $8 million a year with four members, then each member, per se, is receiving $2 million a year for a total of $8 million. When Q4 is certified is NOVA, the consortium had $2 million in carryover or about 25%. So if you divide the $2 million by $8 million, the carryover was made up of each member having at least $500k in carryover, and each member had a 25% carryover. So this would cause the consortia to fall within the exceeded 20% carryover threshold for the consortia and will be flagged according to AB 1491 legislation. Next slide, please.

So what will happen once a consortia is flagged on an annual basis is in NOVA. The consortia will be prompted to complete a written expenditure plan. And so that written expenditure plan will populate in NOVA and we will provide additional training to cover more in depth what that will look like. The programmers are working to include the expenditure plan in NOVA.

And of course, as always, we'll make sure to provide guidance and training on how to go about completing this written expenditure plan. This will allow the state to track the progress of the expenditure plan, so keep that in mind that once the consortia gets flagged they will be required to complete this written expenditure plan and then the state will be monitoring the progress based on the plan that the consortia has outlined to reduce the carryover percentage threshold. Next slide, please.

An additional item that will occur is the technical assistance. So at the consortia level, first step is if a consortia has carryover, it will flag the system in NOVA and a written expenditure plan will populate for the consortia to complete and the members will sign off on that written expenditure plan. And then the second aspect to this is the technical assistance. So the state will work with our CAEP TAP to assign technical assistance to those consortia to ensure that the effective use of funds is being carried out as specified by policy and legislation.

Ultimately, our focus is to ensure that the consortia annual carryover does not continue to exceed the 20% threshold so that it continues to provide the adequate adult education services to the region. There will be additional details on the technical assistance and the state level that will occur to review and ensure adequate services related to funding are taking place. As we mentioned, just want to highlight this actual tracking will occur in fiscal year '23-24, so the technical assistance for the consortia carryover and the written expenditure plan-- we won't see that kick in until we're talking about 2024. Next slide, please.

Consortia carryover summary-- so just to summarize the carryover aspect for the consortia, this is going to start in '23-24. The state is going to track consortia carryover to determine if any consortia is exceeding that 20% carryover from one or more prior fiscal years. And then the consortia carryover is based on certification of Q4 in NOVA by September 30.

I want to say maybe Neil may have highlighted this, but one of the key aspects that we really want to make sure we point out is that Q4 certification period is going to be highly critical. So this goes for the members to really try and reach those Q4 certifications. Because that is where we will look at once that Q4 is certified, that is how we're looking at what is that carryover balance. And so trying to meet those deadlines at the member level certification, at the consortia level, and making sure that those Q4 reports are certified in a timely manner will be very critical as we are running reports and looking at those carryover balances.

And rest assured, we're working very diligently to ensure that we are incorporating tools in NOVA that will be user-friendly for the members to review, to track, and then the consortia, and we will be providing additional training. Next slide, please.

So an additional consortia carryover summary-- consortia with 20% or more carryover will be required to submit the written expenditure plan to the state, in which they will outline how the consortia will work to reduce the carryover below the 20% threshold. And the state will assign technical assistance to those consortia to ensure that there is the effective use of funds and that they don't continue to carry over that 20%. This is the second-tier level of monitoring that will occur. It is the first tier where the members should really focus on spending down those funds, eliminating as best possible that carryover balance because the state will not reallocate any of those funds.

But at the consortia level, the legislation allows for that. So you really want to, within your own institution, really focus on spending down those funds as they were supposed to be spent according to your plans and what the intent of it is to be providing adequate adult education services to your region. Otherwise, these carryover flags are going to come into place. And that is where, at the consortia level and then as well at the state level, these various tier systems will be flagged and put in place. Next slide, please.

So AB 1491 for the consortia takeaways-- as we've been reiterating, a member carryover impacts consortia carryover. So really, this message should be for the members to really focus on spending down that carryover, looking at when you're certifying those quarterly four reports because that will be very critical. And when we're looking at that carryover balance, if member carryover is managed, then the consortia carryover would be under the 20%.

And then '23-24 is when this is going to go into effect. And Q4, once again, that is going to be a very critical time period. So ensuring that members are certifying and the consortia is also certifying before or within that timeline. Anything later than that is going to potentially create some challenges and issues, which we'll address as we get to those points in time.

And as a result, AB 1491 authorizes-- overall, it authorizes a consortium to reduce a member's excessive carryover funding. So as long as it is consistent with the same aspect, which is the member no longer wishes to provide services that are consistent with the adult education plan, that's one of the options in which the consortia can reduce the member's funding. Number two, if the member cannot provide services that address the needs identified in the adult education fund, and number three, if the member has been ineffective in providing services that address the needs identified in the adult education fund.

And this added language to AB 1491, the changes to this Ed Code include having that excessive carryover for at least two consecutive fiscal years. And this will begin in '23-24 fiscal year and each fiscal year thereafter and if reasonable interventions have not resulted in improvements. Next slide, please.

As we've been talking tools and resources in NOVA-- so we are working very diligently to have these tools updated. And we will plan on having a webinar with our CAEP TAP partners to ensure that we are able to walk through what are the tools. If just presenting on this new legislation and guidance is confusing, we know what will come when we release those NOVA tools. So we want to make sure that we walk with you in this rollout of tools that will be available in NOVA. So keep an eye out for that.

We are looking at the forecasting tool and expenditure threshold percentage tool, a corrective action flag. We're looking at that, which will be at the member level. And it is very it's going to be very closely aligned to what we have outlined in the guidance. So the tools that are being rolled out will align with what we have outlined in the guidance.

The CFAD, as you may have already known, has already been updated as well, question number 16 and number 17. And I'll actually take an opportunity right now-- I know there were some questions that were brought up earlier. So I did want to highlight, I know we were looking in our system and there was one member or one consortia who was ahead of the game and was able to get their CFAD already submitted, and so we are going to be working with that CFAD because the one additional tool that is not yet available, but will soon be by the end of this week is going to be this carryover threshold percentage. And then we will have Veronica-- there is a slide in which she'll cover-- you'll get to see what that's going to look like in the upcoming slides.

But just know that the CFAD that has been aligned with this AB 1491 legislation, there are three aspects. So question number 16, question number 17 has been updated. And there is one additional tool that is not there yet today, but will be by the end of the week.

So we do want to kindly ask to hold off on submitting the CFAD as we work to get that in place. We will send out communication once that has been updated and we do have a mock-up slide to show you what that will look like and be able to walk you through. We know that the deadline for the CFAD is quickly approaching on May 2nd, and so we would like for you to hold off on submitting this, especially as we are providing additional guidance, these tools, and providing clarification on the rollout of this AB 1491 and how that applies and impacts the CFAD.

Annual plan question on carryover-- we've been updating-- we've updated, actually, the fiscal management. And we are working to implement reports for carryover at the member level. So rest assured because there is this two-tier level of monitoring or tracking that will be occurring. We are working with our programmers to ensure that we are incorporating tools at the member level and flags.

You will see what we've updated to ensure that the members can identify the carryover, that the consortia can identify the carryover, and then the reports that they can run to be able to track this carryover at the consortia for the members and so forth. So we will be providing additional details and having a presentation specifically on this to walk you through those tools. Next slide, please.

We are also working on consortia onboarding, governance, administrative functions. So we are working closely with our TAP to try and roll out a series of professional development trainings. We understand the concern about the CFAD and the deadline that is quickly approaching and the training on governance bylaws. So we will revisit this professional development series timeline that we have to ensure that we are able to align with what the field is working on and the deadlines that they are working on. So I appreciate the feedback that you guys are providing and the concerns so that we can take that back and work together to try and support you all as you're trying to complete the CFAD in a timely manner.

Targeted technical assistance will also be incorporated. NOVA workshops and technical assistance will all be made available. Next slide, please.

Whenever we released the guidance-- what was that, back in early March? We were able to also incorporate a timeline to help you all in understanding the rollout of this legislation. And so in the memos, there is a link to an FAQ. There is a link to a timeline, and we understand that this legislation has a big impact, and it's going to take time to adapt. New things will arise, and so we are open to collecting all that feedback and input as we get ready to roll this out, and we will work with you all to ensure.