1. Uniform Grants Guidance
2015 ESEA Directors Institute
August 25, 2015

2. Consolidated Planning & Monitoring
Eve Carney
Executive Director
Renee Palakovic
Director of Planning

3. Agenda Background on Uniform Grants Guidance Allowability
Basic Cost Principles
Specific Items of Cost
Grants Management Systems
Time and Effort
Financial Management
Procurement
Records and Reviews
Requirements of Pass-Through Entities (TDOE)

4. Why UGG and Why Now?

5. Uniform Grants Guidance: Rationale
Simplicity
Consistency
Obama Executive Order on Regulatory Review
Increase Efficiency
Strengthen Oversight
Why now?

6. Key Dates Feb. 1, 2013 Notice of Proposed Rulemaking Dec. 26, 2013
Grants Guidance Published Federal Register
June 26, 2014
Draft Regulations Due to OMB
Aug. 29, 2014
COFAR Releases FAQs
Dec. 26, 2014
Final Regulations Published
July 1, 2015
Uniform Grants Guidance in effect for new awards (grants awarded after Dec. 26, 2014)

7. Most Significant General Changes
Auditors (A federal OIG) and Monitors (federal and State Pass-Through) must look more to “outcomes” than to “process”
The Omni Circular has a MAJOR emphasis on “strengthening accountability” by improving policies that protect against waste, fraud and abuse
Required written policies/procedures

8. Allowability – Cost Principles and Items of Cost

9. Cost Principles: Factors Affecting Allowability§
All Costs Must Be:
Necessary, Reasonable, and Allocable
In conformance with federal law and grant terms
Consistent with state and local policies
Consistently treated
In accordance with Generally Accepted Accounting Principles (GAAP)
Not included as match
Net of applicable credits
Adequately documented
 in accordance with relative benefits received

10. Selected Items of Cost – Conferences
§ (Updated)
Allowable conference costs include rental of facilities, costs of meals and refreshments, transportation, unless restricted by the federal award
New: Costs related to identifying, but not providing, locally available dependent-care resources
New: But “travel” allows costs for “above and beyond regular dependent care”
Conference hosts must exercise discretion in ensuring costs are appropriate, necessary, and managed in manner than minimizes costs to federal award

11. Selected Items of Cost – Travel
§ (Changed)
Travel costs may be charged on actual, per diem, or mileage basis
Travel charges must be consistent with entity’s written travel reimbursement policies
Grantee must retain documentation that participation of individual in conference is necessary for the project
Travel costs must be reasonable and consistent with written travel policy / or follow GSA 48 CFR (a)

12. Selected Items of Cost – Entertainment
§ (Clarified)
Costs of entertainment are unallowable
Amusement, Social Activities
Exception: where costs are authorized or have prior written approval of the federal awarding agency

13. Time and Effort

14. Time and Effort Basics §200.430
New Name: Time Distribution Records “Standards for Documentation of Personnel Expenses”
If federal funds are used for salaries, then time distribution records are required
How staff demonstrate allocability
If employee paid with federal funds, then must show that the employee worked on that specific federal program cost objective
Paid in whole or in part with federal funds (i)(1)
Used to meet a match/cost share requirement (i)(4)

15. Participants All employees paid in part or in full with federal funds
Some employees paid with non-federal funds (state match)
Part-time employees
NOT contractors

16. Part 200 Cost Objective – Defined
§200.28
What is a cost objective?
Program, function, activity, award, organizational subdivision, contract, or work unit for which cost data are desired and for which provision is made to accumulate and measure the cost of processes, products, jobs, capital projects, etc.

17. What Are Not Cost Objectives
Federal Programs
Title I, Part A
Doing my job
ESEA
Working on initiatives and programs that benefit Students with Disabilities
Director of Federal Programs
IDEA
Educating children in classrooms

18. Multiple Cost Objectives
Multiple Cost Objectives § (vii) include working on
More than one federal award
A federal award and a non-federal award
An indirect cost activity and a direct cost activity
Two or more indirect activities that are allocated using different allocation bases
An unallowable activity and a direct or indirect cost activity

19. A-87 Standards – Current Rule
Semi-Annual Certifications
If an employee works on a single cost objective:
After the fact
Account for the total activity
Signed by employee or supervisor
Every six months (at least twice a year)
Personnel Activity Report (PAR)
If an employee works on multiple cost objectives:
After the fact
Account for total activity
Signed by employee
Prepared at least monthly and coincide with one or more pay periods

20. 2 CFR Part 200 Standards – New Rule
Charges for salaries must be based on records that accurately reflect the work performed
Must be supported by a system of internal controls which provides reasonable assurance charges are accurate, allowable, and properly allocated
Be incorporated into official records
Reasonably reflect total activity for which employee is compensated and not exceed 100%
Encompass all activities (federal and non-federal)
Comply with established accounting polices and practices
Support distribution among specific activities or cost objectives

21. New Rule – Compliance
If records meet the standards: the non-federal entity will NOT be required to provide additional support or documentation for the work performed (i)(2)
BUT, if “records” of grantee do not meet new standards, ED may require PARs (i)(8)
PARs are not defined
Questioned costs must be repaid using state/local funds
Recommend maintaining current system of documenting personnel expenses until these new standards have been audited

22. Use of Budget Estimates and Percentages in Documenting Personnel Activities
Budget estimates alone do not qualify as support for charges to federal awards § (i)(1)(viii)
May be used for interim accounting purposes if:
Produces reasonable approximations
Significant changes to the corresponding work activity are identified in a timely manner
Internal controls in place to review after-the-fact interim charges based on budget estimates
NEW: Percentages may be used for distribution of total activities § (i)(1)(ix)

23. Reconciliation
NEW: All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. § (i)(1)(viii)(C)
Annually, reconciliation assures allocability – charging the federal award only for the benefit received.

24. Example: Title I, Part A Cost Objectives
For Title I, there are several SEA-level cost objectives:
Administration
Title I, Part A School Improvement (4%)
Title I, Part A Statewide Program
At the LEA level, there are additional cost objectives for Title I:
parent involvement
homeless
equitable services
district initiatives

25. De Minimis Benefit
Limited work on another cost objective does not need to be captured in time and effort records.
Employees may work 5% or less on another cost objective.
The worked performed on these limited duties cannot deprive a benefit from the intended beneficiaries.
EXAMPLE: A teacher works on a single cost objective but also has limited other responsibilities, such as cafeteria or bus duties.
As long as these additional responsibilities do not exceed 5% over a twelve-month period, then the teacher can still complete a semi-annual certification (single cost objective)

26. Financial Management Controls: Key Components

27. Internal Controls
§ – Essentially same as current requirements under section 80.20(b)(3):
Effective control over and accountability for:
All funds
Property
Other assets
Must adequately safeguard all assets
Use assets solely for authorized purpose
New: Internal controls “should” be in compliance with:
The U.S. Comptroller General’s Standard for Internal Control Integrated Framework:

28. Internal Controls
§ – Internal Controls must ensure compliance with federal statutes, regulations, and terms of the award.
Entities must:
Evaluate and monitor compliance
Take prompt action when instances of non-compliance are identified; and
Safeguard protected personally identifiable information (PII)

29. NEW: Written Cash Management Procedures
Written Procedures required to implement the requirements of
Written procedures must include a description of the method the district uses (Tennessee is a reimbursement state)
Must minimize time elapsing between reimbursement request and disbursement to comply with Cash Management Improvement Act (CMIA)

30. New: Written Allowability Procedures
Written procedures required for determining allowability of costs in accordance with Subpart E – Cost Principles
Procedures can not simply restate the Uniform Guidance Subpart E
Should explain the process used throughout the grant development and budget process
Someone familiar with the program requirements should be involved with the allowability determinations, and the written procedures should include this (position, not name of employee)

31. Subgrantee or Contractor?

32. Subgrantee v. Contractor
Why is the distinction important?
Federal money spent by a subgrantees is subject to audit
Payments to contractors are not federal awards and not subject to audit

33. What is a Subgrant?
Federal law dictates what a subgrant is and when it is allowed
Therefore, subgrants are permitted when mandated by statute!
Subgrantees (also known as Subrecipients) must carry out responsibilities of the federal program
SEAs and LEAs must monitor subgrantees’ compliance with all federal program and fiscal requirements

34. What is a Contract?
A contract provides goods or services as needed by the program
Contractors (also known as Vendors) are NOT responsible for carrying out the responsibilities of the federal program
Contractors must carry out the terms of their contracts
Grantees and Subgrantees must have a contract administration system to ensure contractors are complying with the terms of their contracts

35. Subgrant v. Contract How to Distinguish the Difference
A subgrantee:
Determines who is eligible to participate in the federal program
Measures performance against objectives of the federal program
Is responsible for programmatic decision-making
Is responsible for complying with federal program requirements
Uses federal funds to carry out the program (not just provide specific goods/services)
A contractor:
Provides goods/services within normal business operations
Provides similar goods/services to different purchasers
Operates in a competitive environment
Provides goods/services ancillary to operation of federal program
Is NOT subject to compliance requirements of the federal program.

36. Subgrant v. Contract
A public agency’s designation as a Contract or Subgrant is not binding
Auditors are required to use their professional judgment to determine the true nature of a document based on the previous criteria (OMB Circular A-133 and Compliance Supplement)
In making the determination – the substance of the relationship is more important than the form of the agreement

37. Financial Management Controls: Procurement

38. Open Competition §
All procurement transactions must be conducted with full and open competition (in Tennessee over 10,000)
T.C.A. states that the threshold of $10,000 or more for purchases.
Cumulative purposes anticipated to exceed $10,000 must be competitively bid
To eliminate unfair advantage, contractors that develop or draft specifications, requirements, statement of work, and invitations for bids or RFPs must be excluded from competing for such procurements

39. Conflict of Interest §
Must maintain written standard of conduct, including conflict of interest policy
A conflict of interest arises when any of the following has a financial or other interest in the firm selected for award:
Employee, officer, or agent
Any member of that person’s immediate family
That person’s partner
An organization which employs, or is about to employ, any of the above or has a financial interest in the firm selected for award

40. Conflict of Interest §
NEW: All non-federal entities must establish conflict of interest policies, and disclose in writing any potential conflict to federal awarding agency in accordance with applicable federal awarding agency policy

41. Cost/Price Analysis §
Must perform a cost or price analysis in connection with every procurement action, including contract modifications
NEW: Only required for costs in excess of the simplified acquisition threshold ($150,000)
Cost analysis generally means evaluating the separate cost elements that make up the total price (including profit)
Price analysis generally means evaluating the total price
However, TN has a lower limit of $10,000

42. Vendor Selection Process§
Methods of procurement:
NEW: Micro-purchase
Small purchase procedures – N/A to Tennessee
Competitive sealed bids
Competitive proposals
Non-competitive proposals

43. Vendor Selection Process: 1) Micro-Purchase
NEW: Acquisition of supplies and services under $3,000 or less
May be awarded without soliciting competitive quotations if nonfederal entity considers the cost reasonable
To the extent practicable must distribute micro-purchases equitably among qualified suppliers

44. Vendor Selection Process: 2) Small Purchase Procedures – N/A to TN
Good or service that costs $100,000 or less (NEW: $150,000 under )
TN has a lower threshold, $10,000; therefore this procurement method is Not Applicable
Must obtain price or rate quotes from an adequate number of qualified sources
“Relatively simply and informal”

45. Vendor Selection Process: 3) Noncompetitive Proposals
Appropriate only when:
The good or services is available only from a single source (sole source)
There is a public emergency
The awarding agency authorizes
NEW: awarding agency or pass-through must expressly authorize noncompetitive proposals in response to written requires from nonfederal entity (f)(3)
After soliciting a number of sources, competition is deemed inadequate
Cannot contract with vendor who has been suspended or debarred:

46. Contract Administration§
Revised: Nonfederal entities, such as TDOE, must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of the contract
Contractors bound by terms of contract
Important to include appropriate terms and conditions
Manage for performance

47. Use and Disposition of Grant-Acquired Equipment§
Clarification: shared use is allowed if such use will not “interfere”:
1st preference – other projects supported by the federal awarding agency
2nd preference – project funded by other federal agencies
3rd preference – use for non federally funded programs
When property no longer needed, must follow disposition rules:
Transfer to another federal program
Over $5,000 – pay federal share
Under $5,000 – no accountability

48. Financial Management Controls: Records and Reviews

49. Methods for Collection, Transmission, and Storage of Information§
NEW: When original records are electronic and cannot be altered, there is no need to create and retain paper copies
When original records are paper, electronic versions may be substituted through the use of duplication or other forms of electronic media provided they:
Are subject to periodic quality control reviews,
Provide reasonable safeguards against alteration; and
Remain readable
Records should be retained 7 years from the award date

50. Requirements of the Pass-Through Entity

51. Federal awarding agency review of risk posed by applicants§
NEW: ED and “Pass-Through” must have in place a framework for evaluating risks before applicant receives funding
Financial Stability
Quality of Management System
History of Performance
Audit Reports
Applicant’s Ability to Effectively Implement Program

52. Federal awarding agency review of risk posed by applicants§
ED or “Pass Through” May Impose “additional federal award conditions”:
Require reimbursement;
Withhold funds until evidence of acceptable performance;
More detailed reporting;
Additional monitoring;
Require grantee to obtain technical or management assistance; or
Establish additional prior approvals

53. Monitoring and reporting program performance§
NEW: Monitoring by the “Pass Through”
Monitor to assure compliance with applicable federal requirements and performance expectations are achieved
Must cover each program, function or activity (see also )
Must submit “performance reports” at least annually

54. Resources
Uniform Grants Guidance:
COFAR:
OCFO Time and Effort Guidance:

55. Resources
2 CFR 200:
FAQs:
EDGAR:
Title 34, Code of Federal Regulations (CFR), Parts 75-79, 81 to 86 and For awards made prior to 12/26/2014, EDGAR Parts 74 and 80 still apply.
For awards made on or after 12/26/2014, 2 CFR Part 200, which includes the substance formerly in parts 74 and 80, applies.

56. Resources ePlan: https://eplan.tn.gov/
Uniform Grants Guidance Training Videos:
NOTE: The videos are not to be used for any other purpose nor shared with anyone outside of the department or LEA.

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