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Grants Management 21 st Century & Homeless Education Staff Development Office of Federal Programs August 2013.

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Presentation on theme: "Grants Management 21 st Century & Homeless Education Staff Development Office of Federal Programs August 2013."— Presentation transcript:

1 Grants Management 21 st Century & Homeless Education Staff Development Office of Federal Programs August 2013

2 Legal Background Grant Administration – Determining Allowable Costs – Sub-grantee vs. Contract – Supplement Not Supplant – Federal Cost Principles – Items of Cost – Compensation for Personal Services Grants Management Systems – Financial Management – Procurement – Inventory Management 2 Agenda

3 3 Legal Background

4 Statutes – Program statutes (NCLB) – General Education Provisions Act (GEPA) – ESEA Flexibility Regulations – Program regulations – Education Department General Administrative Regulations (EDGAR) OMB Circulars Guidance 4 Legal Structure of Federal Programs

5 Law (statute) - ESEA/NCLB Code of Federal Regulations (CFR) – Title 34 Education http:/ – Education Department General Administrative Regulations (EDGAR) ED guidance – Non-regulatory guidance – Policy letters 5 Levels of Authority

6 Grant Administration 6

7 7 Allowability Yes!

8 Is the proposed cost allowable under the relevant program? Is the proposed cost consistent with program specific fiscal rules? Is the proposed cost consistent with federal cost principles? Is the proposed cost consistent with EDGAR? 8 How to Determine if a Cost is Allowable

9 Is the proposed cost consistent with special conditions imposed on the grant? Is the proposed cost consistent with the underlying needs of the program – Data driven decision making – Target funds to areas of weakness 9 How to Determine if a Cost is Allowable

10 In general, there are 2 types of programs – Specific rules regarding allowable costs E.g., 21 st CCLC Title IV, Part B – SEA level allowability activities – 12 allowable uses of funds at LEA level – Flexible program – general criteria E.g., Title I, Part A program funds – Eligible students – Purposes of program 10 Program Allowability

11 Local grantees are limited to providing activities within the following: Remedial education activities and academic enrichment learning programs; Mathematics and science education activities; Arts and music education activities; Entrepreneurial education programs; Tutoring services and mentoring programs; Programs that provide after-school activities for limited English proficient students that emphasize language skills and academic achievement; 11 21 st Century Allowablility

12 (Cont.) Recreational activities; Telecommunications and technology education programs; Expanded library service hours; Programs that promote parental involvement and family literacy; Programs that provide assistance to students who have been truant, suspended, or expelled, to allow the students to improve their academic achievement; and Drug and violence prevention programs, counseling programs, and character education programs. 12 21 st Century Allowablility

13 13 Subgrant vs. Contact

14 Subgrant Allowable activities based on applicable statute, local plan, State rules Management rules – EDGAR; – Applicable OMB Circular; and – State law/policies and procedures Contract Allowable activities based on terms and conditions of contract Management rules – Terms of the contract; and – State contract law 14 Subgrant vs. Contact

15 Subgrantee – Determines who is eligible to participate in a federal program – Has its performance measured against whether the objectives of the federal program are met – Is responsible for programmatic decision making – Is responsible for complying with federal program requirements – Uses the federal funds to carry out a program as compared to providing goods or services for a program 15 Subgrant vs. Contract

16 Contractor – Provides the goods and services within normal business operations – Provides similar goods or services to many different purchasers – Operates in a competitive environment – Provides goods or services that are ancillary to the operation of the federal program – Is not subject to compliance requirements of the federal program 16 Subgrant vs. Contract (cont.)

17 17 Supplement not Supplant

18 Federal funds must be used to supplement and in no case supplant (federal), state, and local resources “What would have happened in the absence of the federal funds??” 18 Supplement not Supplant

19 May 21st CCLC program funds support communities that are already implementing before- and after- school activities? Yes. 21st CCLC funds may be used to expand and enhance current activities provided in existing after- school programs, whether supported by public or private funds. For example, a grantee may use funds to align activities to help students meet local and State academic standards if those services are not part of the current after-school program. Again, grantees must bear in mind that 21st CCLC funds can be used only to supplement and not supplant any Federal or non- Federal funds used to support current programs. 19 Supplement not Supplant

20 Remember your assurances!!! 20 Supplement not Supplant

21 Auditors presume supplanting occurs if federal funds were used to provide services. 1.Required to be made available under other federal, state, or local laws 2.Provided with non-federal funds in prior year 3.Provided services to Title I schools and the same services were provided to non-Title I schools. 21 3 Presumptions of Supplanting:

22 22 Federal Cost Principles

23 A-21 Educational Institutions A-87 State, Local & Indian Tribal Governments A-122 Non-Profit Organizations 48 CFR pt. 31 For-Profit Organizations 23 Federal Cost Principles

24 All Costs Must Be: 1.Necessary/Reasonable 2. Allocable 3.Legal under state and local law 4.Conform with federal law & grant terms 5.Consistently with Policies, Regulations, and Procedures 6.Accorded Consistent Treatment 7.In accordance with GAAP 8.Not included as match 9.Net of applicable credits 10.Adequately documented 24 Cost Principles: Basic Guidelines

25 1.Necessary and Reasonable – Must be necessary for the performance or administration of the grant – Must follow sound business practices: Arms length bargaining (hint: procurement processes) Follow federal, state and local laws Follow terms of the grant award – Fair market prices – Act with prudence under the circumstances – No significant deviation from established prices 25 Necessary & Reasonable

26 26 Necessary & Reasonable (cont.) Data Driven Decision Making… Strategic Goal Measurable Objective Current Performance (based on data) Critical Needs

27 Practical aspects of “necessary” – Do I really need this? – Is this the minimum amount I need to spend to meet my need? Practical aspects of “reasonable” – Is the expense targeted to valid programmatic/administrative considerations? – Do I have the capacity to use what I am purchasing? – Did I pay a fair rate? Can I prove it? – If I were asked to defend this purchase, would I be comfortable? 27 Necessary & Reasonable (cont.)

28 2.Allocable – Can only charge in proportion to the value received by the program Example: LEA purchases a computer to use 50% in the Title VI program and 50% in a state program – can only charge half the cost to Title VI – Two (2) methods of allocating costs: Direct cost allocation Indirect cost allocation 28 Allocable

29 3.Legal under state and local law – If you can’t do it under state law, you can’t pay for it with federal funds 4.Conform with federal law & grant terms – Example: Match Requirements 5.Consistently treated – Must follow uniform policies that apply equally to federal and non-federal activities – Cannot assign cost as direct cost if indirect under state programs 29 Basic Guidelines (cont.)

30 7.In accordance with GAAP 8.Not included as match 9.Net of applicable credits – Examples: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, adjustments of overpayments 30 Basic Guidelines (cont.)

31 10.Adequately documented – Amount of funds under grant – How the funds are used – Total cost of the project – Share of costs provided by other sources – Records that show compliance – Records that show performance – Other records to facilitate an effective audit 31 Basic Guidelines (cont.)

32 Federal Items of Cost 32

33 OMB Circular 43 specific costs detailed Listed in alphabetical order 33 Federal Items of Cost

34 Advertising/PR – Generally not allowable, except as specified in Attachment B Alcohol – Not allowable Audit Costs – Allowable to the extent provided under A-133 – Other audit costs are allowable if included in a cost allocation plan 34 Selected Items of Cost

35 Defense and Prosecution of Criminal and Civil Proceedings, and Claims – Legal expenses required in the administration of federal programs are allowable – Legal expenses for “prosecution of claims” against the federal government are not allowable Employee Morale, Health and Welfare – Health or first aid clinics, recreational activities, employee counseling services are allowable Entertainment – Amusement, diversion, and social activities are not allowable Fines and Penalties – Not allowable 35 Selected Items of Cost

36 Memberships, Subscriptions and Professional Activities – Meetings and conference where the primary purpose is dissemination of technical information are allowable – Includes costs of meals, transportation, facility rental, and speakers’ fees Training – Training for employee development is allowable Travel costs, including transportation, lodging, subsistence, and related items, when traveling on business are allowable with certain restrictions 36 Selected Items of Cost (cont.)

37 Salaries and Wages – Allowable if proper time distribution records – Time Distribution Records must be maintained for all employees whose salaries are: Paid in whole or in part with federal funds Used to meet a match/cost share requirement 37 Selected Items of Cost (cont.)

38 38 Cost Principal: Personal Services

39 Periodic Certifications OMB Circular A-87, Attachment B, Item 8 (h) (3). Periodic Certifications are commonly known as Semiannual or Biannual Certifications. They are required to be completed at least every six-months. The only personnel that may utilize this method are employees who dedicate 100% of their time during a fiscal year to one federal program or cost objective. 39 Cost Principal: Personal Services

40 Personnel Activity Reports OMB Circular A-87, Attachment B, Item 8 (h) (4). Personnel Activity Reports (PAR) are commonly known as Time and Effort Logs or Monthly Logs. They are required to be completed at least monthly. Personnel that must utilize this method are employees who dedicate their time to: a.More than one Federal award, b.A Federal award and a non Federal award, c.An indirect cost activity and a direct cost activity, d.Two or more indirect activities which are allocated using different allocation bases, or e.An unallowable activity and a direct or indirect cost activity. 40 Cost Principal: Personal Services

41 Overview of process: – Estimate how employee will work – Pay based on estimate – Reconcile estimates to how actually worked Necessary documentation: – Payroll records – Personnel activity report – Semi-annual certifications 41 Time Distribution Records

42 Type of documentation depends on how many “cost objectives” the employee worked on These cost objectives must be connected to the employee’s salary source What is a cost objective? – A specific grant award, or other category of costs, that requires the grantee to track specific cost information 42 Required Time Distribution Documentation

43 If an employee works on a single cost objective: – Semi-Annual Certification After the fact Account for the total activity Signed by employee or supervisor every six months Prepared at least twice a year – Example: “I hereby certify that for the period January 1, 2012 through June 30, 2012 one- hundred percent (100%) of my time and effort was spent on Title I Administration.” 43 Single Cost Objectives – Semi-Annual Certification

44 If an employee works on multiple cost objectives: – Personnel Activity Report (PAR) or equivalent documentation After the fact Account for total activity Signed by employee Prepared at least monthly and coincide with one or more pay periods 44 Multiple Cost Objectives – Personnel Activity Report (PAR)

45 1.Estimate how employee will work Must produce reasonable approximations of the activity actually performed 2.Quarterly comparison of estimates to actual costs If difference is less than 10% - annual adjustment If difference is more than 10% - quarterly adjustment 45 Distributing Payroll Costs

46 Grant Management Systems 46

47 May require prior approval – Budget changes 10% or $100,000 (state may modify) – Program changes Change in scope or object Change in key personnel No cost extension Contract with 3 rd party to administer program 47 Amendment Procedures

48 Cannot use federal funds for: – Religious worship, instruction – Construction, remodeling, repair, operation, or maintenance of religious facility 48 Use of Funds for Religion

49 Unless authorized by statute, cannot use federal funds for: – Acquisition of real property – Construction 49 Real Property and Construction

50 Three major “systems” in grants management:  Financial Management  Inventory Management  Procurement 50 Grant Management Systems

51 State and local agencies must use fiscal control and fund accounting procedures that will ensure the proper disbursement of, and accounting for, federal funds – Section 441 of GEPA (general assurances) – Section 9306 of NCLB (program assurances) – Section 76.702 of EDGAR 51 What Rules Apply?

52 All recipients of federal funds must be able to: 1.Spend federal money correctly; and 2.Prove that they spent federal money correctly 52 What Does that Mean?

53 Seven (7) requirements: 1.Financial Reporting 2.Accounting Records 3.Internal Control 4.Budget Control 5.Allowable Cost 6.Source Documentation 7.Cash Management 53 Financial Management System (FMS)

54 Internal controls are tools to help program and financial managers achieve results and safeguard the integrity of their programs – Includes processes for planning, organizing, directing, controlling, and reporting on agency operations Objectives of Internal Controls – Effectiveness and efficiency of operations – Reliability of financial reporting – Compliance with applicable laws and regulations – Safeguarding assets 54 Internal Controls

55 Risk Assessment Control Activities Information and Communications Monitoring Control Environment 55 Components of Internal Controls

56 Must compare actual expenditures to budgeted amounts on a routine basis; and Document all adjustments. 56 Budget Control

57 Payment Process – Obligation – Liquidation – Drawdown – Payment Obligation = Transaction that requires payment 57 Cash Management

58 Type of ObligationWhen Obligation Occurs Acquisition of PropertyDate of binding written commitment Personal Services by Employee When services are performed Personal Services by Contractor Date of binding written commitment TravelWhen travel is taken 58 Obligations

59 Every grant has a “period of availability” = period in which grantee can obligate funds In general, ED cannot extend the period of availability – But has waiver authority 59 Obligations (cont.)

60 Grantees and subgrantees may begin to obligate funds when: – Awarding agency approves application; or – Awarding agency determines application is “substantially approvable” Reimbursement subject to final approval 60 Obligations (cont.)

61 Tydings Amendment – Allows extra year to obligate funds – Does not apply to all grants Under Tydings, funds are available for 24-27 months: – 12-15 months under the grant award – (July 1, 2013 – September 30, 2014) – Plus 12 months – (October 1, 2014 – September 30, 2015) 61 Obligations (cont.)

62 Under Tydings, unobligated funds can usually be “carried over” from first year Generally, no limit on “carryover” unless stated – Title I, Part A = 15%, SEA may waive every 3 years 62 Obligations (cont.)

63 Liquidation = Settle an obligation by paying funds State must liquidate all obligations within 90 days after the end of the period of availability – Example: Period of availability: July 1 – September 30th Liquidation period ends: December 31 st State may impose shorter deadline on subgrantee 63 Liquidations

64 Must have written selection procedures Procedures must ensure all solicitations: – Include a clear and accurate description of technical requirements – Identify all requirements vendor must fulfill – Identify evaluation factors 64 Vendor Selection Process

65 All contracts supported with federal funds must contain certain required provisions: – Remedies for breach, sanctions, penalties – Termination for cause and convenience – Compliance with federal statutes and executive orders – Reporting requirements – Patent rights – Copyrights – Access by federal agency, Comptroller General of US to records of contractor – Retention of records for 3 years after final payment 65 Contract Administration

66 Must maintain a contract administration system that ensures contractors perform in accordance with the terms, conditions, and specifications of the contract 66 Contract Administration (cont.)

67 As a practical matter: Must have written contracts (purchase order ok) and invoice. Contract should include clearly defined deliverables – Description of services to be performed or goods to be delivered – Description of dates when services will be performed or goods delivered – Description of locations where services will be performed or goods delivered – Description of number of students/teachers/etc. to be served (if applicable) Invoice should be reviewed & approved before payment Segregation of duties Documented approvals 67 Contract Administration (cont.)

68 Different rules for equipment and supplies Equipment – Federal Definition of Equipment Tangible personal property Useful life of more than one year Acquisition cost of $5,000 or more – State may use another definition as long as it includes all property described above 68 Inventory Management

69 Must have adequate controls in place to account for: – Location of equipment – Custody of equipment – Security of equipment 69 Equipment

70 Property records – Description, serial number or other ID, title info, acquisition date, cost, percent of federal participation, location, use and condition, and ultimate disposition Physical inventory – At least every two years Control system to prevent loss, damage, theft – All incident must be investigated 70 Equipment (cont.)

71 Supplies = Everything Else Must maintain effective control and accountability Must adequately safeguard all such property Must assure that it is used solely for authorized purposes 71 Supplies

72 -management.html 72 USDE Online Courses

73 73

74 Mississippi Department of Education Office of Federal Programs Marcus E. Cheeks, Director of Federal Programs 359 North West St, Suite 111 Jackson, MS 39205 (601) 359-3499 74 Contact Information

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