Interim Rule on CDBG Accounting Changes for State CDBG

Effective Date: December 14, 2015 Published: November 12, 2015 Effective Date: December 14, 2015 If you are allowing a local government to retain program income, either for continuing the same activity or for a revolving loan fund.

Locally-retained Program Income in Annual Action Plan Two-Tier Admin Cost Cap 20% If you are allowing a local government to retain program income, either for continuing the same activity or for a revolving loan fund.

Locally-retained Program Income in Annual Action Plan 91.320(k)(1)(iv)… the name of the local entity… contact information… the amounts expected… the eligible activity type(s)…, and the national objective(s)… If you are allowing a local government to retain program income, either for continuing the same activity or for a revolving loan fund.

Why?

Why? §91.320(c)(1) … resources include grant funds and program income.

Why? §91.320(c)(1) … resources include grant funds and program income. … entries into IDIS… capture the state's accomplishment and funding data, including program income… §570.490(a)(3)

Why? §91.320(c)(1) … resources include grant funds and program income. … entries into IDIS… capture the state's accomplishment and funding data, including program income… §91.320(k)(1)(iv) – the missing link – the planned use of the funds §570.490(a)(3)

Why? §570.486(a)(3) Local government requirements… Furnish citizens information, including… (i) The amount of CDBG funds expected … including the grant and anticipated program income… (ii) The range of activities that may be undertaken…

Why? §91.115(e) State Citizen Participation Plan … must describe the citizen participation requirements for units of general local government [570.486]… … [and] explain how the requirements will be met.

We envisioned this information being provided as a table.

AP-30 Methods of Distribution

Providing information on local program income accounts, also provides a full picture of the CDBG program across the State.

Other tools for tracking local program income

Receipts and Vouchers to report on All Program Income transactions

Receipts and Vouchers to report on All Program Income transactions Distinguish between local governments by subgranting program income

Receipts and Vouchers to report on All Program Income transactions Distinguish between local governments by subgranting of program income Tighten up on the definition of “Same Activity”

Receipts and Vouchers to report on All Program Income transactions Distinguish between local governments by subgranting of program income Tighten up on the definition of “Same Activity” Use the PR09 for States

Two-Tier Admin Cost Cap 20%

570.489(e)(3) (ii) The combined expenditures… shall not exceed 20 percent of the aggregate amount of the origin year grant, any origin year grant funds reallocated by HUD to the State, and the amount of any program income received during the program year.

570.489(e)(3) (iii) For origin year 2015 grants and subsequent grants, no more than 20 percent of any annual grant (excluding program income) shall be expended… for planning, management, and administrative costs.

570.489(e)(3) (iv) Funds from a grant of any origin year may be used to pay planning and program administrative costs associated with any grant of any origin year.

Original Test Admin/Planning Expenditures ≤ 20% of amount of grant + program income received in the year New Tier Expenditures ≤ 20% of grant

Program Year Program Year Program Year Program Year Program Year Program Year

Program Year Program Year Program Year Program Year Program Year Program Year

Program Year Program Year Program Year Program Year Program Year Program Year

Program Year Program Year Program Year Program Year Program Year Program Year

How do the caps capture Program Income? Like a car with a broken fuel gauge.

Grant funds in the caps E F

You know how much fuel you put in: The amount of the program income deposits in a given program year goes to the calculation of the caps.

You know how far you can go: Expenditures of program income during the program year are used to determine compliance with the caps.

Program income in the caps is more like a throttle on the flow out based on the flow in.

Program Year Program Year Program Year Program Year Program Year Program Year

Program Year Program Year Program Year Program Year Program Year Program Year

Program Year Program Year Program Year Program Year Program Year Program Year

Program Year Program Year Program Year Program Year Program Year Program Year

Program Year Program Year Program Year Program Year Program Year Program Year

Original Test Admin/Planning Expenditures ≤ 20% of amount of grant + program income received in the year New Tier Expenditures ≤ 20% of grant

Expenditures: Expenditures from the grant over its lifetime, and (in the case of the original tier) Expenditures against program income sources during the program year (regardless of when those funds were received).

Setting the Caps: $10,000,000 Grant $10,000,000 Program Income received in initial PY

Setting the Caps: $10,000,000 Grant $10,000,000 Program Income received in initial PY $20,000,000 Cumulative Amount

Setting the Caps: $10,000,000 Grant $10,000,000 Program Income received in initial PY $20,000,000 Cumulative Amount Original Admin/Planning Cap= $4,000,000 from either the grant over its life, and program income expenditures during the PY. Additional Admin/Planning Cap= $2,000,000 from the grant only.

Prior year versus Current year and Cash Management Rules

Review

We envisioned this information being provided as a table.

Receipts and Vouchers to report on All Program Income transactions Distinguish between local governments by subgranting of program income Tighten up on the definition of “Same Activity” Use the PR09 for States

Two-Tier Admin Cost Cap 20%

Robert.C.Peterson@HUD.Gov