SHARON WELSH, RUTGERS UNIVERSITY NJASFAA CONFERENCE ATLANTIC CITY, NJ NOVEMBER, 2010 Spending FWSP – A Funds Management Primer

Overview of Topics Funding  Notification  Transfer of Funds & Supplemental Funds  Community Service Requirements  Federal Share  Examples Yields Reports and Historical Patterns Check Points Returning Funds Impact Issues Summary Contact Information

In short………. How can you effectively offer FWSP funds? What can you do throughout the year to assure that you effectively spend FWSP funds?

Notification of Federal Funding Campus-Based Funding Notifications:  Tentative funding from US Dept of Ed by February 1  Final funding by April 1  Supplemental funding by September 30 Federal funds are for expenditures from July 1 through June 30, with regulations that are both flexible and specific.

Tentative Funding Letter Posted Date: January 29, 2010 Author: William Leith, Service Director, Program Management, Federal Student Aid Subject: Tentative Funding Levels for the Campus-Based Programs Tentative funding levels and corresponding worksheets for the Campus-Based Programs for the award period July 1, 2010 through June 30, 2011 will be posted to the eCampus-Based (eCB) Web site by February 1, These tentative funding levels are determined in accordance with the Higher Education Act of 1965, as amended (HEA), and the regulations for the Campus-Based programs. Attached to this announcement is an explanation of the calculation of each tentative funding level contained in the worksheet for each program. We will notify schools by when tentative funding levels and worksheets are available on the eCB Web site. We will send these s to the school's Financial Aid Administrator, as provided in the school's most recently submitted Fiscal Operations Report and Application to Participate (FISAP) or as updated via the "Contact Info" page on the eCB Web site. Source:

Final Funding Letter Posted Date: March 22, 2010 Author: William Leith, Service Director, Program Management, Federal Student Aid Subject: Final Funding Authorizations for the Campus-Based Programs The posting of tentative funding levels for the Campus-Based programs was announced in an Electronic Announcement dated January 29, Final funding worksheets and the Statement of Account for each of the Campus-Based programs will be posted to the eCampus-Based (eCB) Web site no later than April 1, The final funding authorization for each Campus-Based program is the amount of funding the school is authorized to receive from the Department of Education (the Department) for the Award Year. A school’s final funding authorization for each Campus-Based program is based on the applicable statutory formula and on the amount of funds appropriated by Congress for that program. A school will not receive a final funding authorization for a Campus-Based program that is in excess of its request for funds made on the Fiscal Operations Report for and Application to Participate for (FISAP) that the school previously submitted to the Department. Source:

Allowable Transfers of Federal Funds Transfer to FSEOG or Perkins FCC allocation or both– total of up to 25% of FWSP Transfer up to 25% of SEOG into FWSP Carry forward and carry back – 10% each Carry back for summer program – to pay wages earned after May 1 and through June 30 Job Location and Development Program – lesser of $75,000 or 10% of federal allocation for administrative funds Administrative Cost Allowance (ACA) - Formula based on expenditures in campus-based programs

Supplemental Funds Supplemental funds are unexpended campus-based funds which are returned and reallocated to schools who qualify. Funds are (usually) reallocated to institutions who have spent at least 5% of their federal allocation on the wages of students employed in literacy or family literacy programs. The Secretary of the US Dept of Ed has specific authority to reallocate funds for reasons other than literacy/family literacy projects. Funds are distributed in September. The funds received may only be used for the wages of students in community service jobs.

Community Service Requirements:  Spend 7% of federal funds for wages of students employed in community service  At least one student must be employed as literacy tutor or in family literacy project  All supplemental federal funds must be used for wages of students employed in community service

Federal Share 75% - Standard federal share, with the exceptions noted below 100% - Literacy tutors, math tutors and students employed in family literacy projects; civic education; institutions designated by US Department of Education 90% - Non-profits who are unable to pay standard 25% match (other restrictions apply) 50% - Private, for-profit (other restrictions apply) Other – Institution chooses to have higher share

Summary Institution receives final federal funds Decisions made about transfers Current year spending is evaluated to determine carry forward/carry back Decisions on summer program and awarding for upcoming academic year are decided Community service spending identified Percentages for various categories of employment and employers are considered

Figures for Examples If final federal allocations was $500,000:  $50,000 may be carried forward and carried back (10%)  $125,000 may be transferred to SEOG/Perkins FCC (25%)  $50,000 may be spent in JLDP (lesser of 10% or $75,000)  May carry back actual wages of summer program (that starts after May 1) through June 30 of current year  ACA may be applied to FWS or to other campus-based federal allocations; ACA formula: 5% of first $2.75 million of expenditures under campus-based programs; 4% of >$2.75 m and $5 million. (We’ll use 5% of FWS federal allocation for examples.)  In examples, estimated amount for literacy/math tutors is used (you may choose to eliminate this step)  Supplemental funds are not included in the examples

Example 1: Assumptions $500,000 in federal FWS funds $125,000 transfer to SEOG $50,000 JLD $25,000 ACA $30,000 carry back to prior year $20,000 for summer program for wages from after May 1 through June 30 $20,000 for tutor wages 25% institutional match

Example 1 $500,000 Final federal funds (125,000) Transfer to SEOG (25%) (50,000) Carry back to prior year (10%) (25,000) Est. ACA (5%) (50,000) JLD (10%) (20,000) Est Summer program starting after May 1 $230,000 Subtotal federal funds (20,000) Est. literacy/math tutors (100%) $210,000 75% federal funds 70,000 25% institutional match $280,000Subtotal ($210,000/.75) 20,000 Est. literacy/math tutors $300,000 Total funds to spend

Example 2: Assumptions $500,000 in federal funds $20,000 for tutors wages 25% institutional match

Example 2 $ 500,000 Final federal funds (20,000) Est. literacy/math tutors (100%) $ 480,000 75% of federal funds to spend 160,000 25% institutional/agency match $ 640,000 Subtotal ($480,000/.75) 20,000 Est. literacy/math tutors $ 660,000 Total funds to spend

Example 3: Assumptions $500,000 in federal funds 10% transfer to SEOG $15,000 to JLD $10,000 carry forward from prior year $20,000 est. for literacy/math tutors 25% match by institution/agency

Example 3 $500,000 Final federal funds 10,000 Carry forward from prior year (50,000) Transfer to SEOG (10%) (15,000) For JLD $445,000 Subtotal federal funds (20,000) Est literacy/math tutors (100%) $425,000 75% federal funds 141,667 25% institutional/agency match $566,667 Subtotal ($425,000/.75) 20,000 Est. literacy/math tutors $586,667 Total funds to spend

Example 4: Assumptions $500,000 in federal funds 10% transfer to SEOG $15,000 to JLD $10,000 carry forward from prior year $20,000 est. for literacy/math tutors wages 30% match by institution/agency (only difference between Examples 3 and 4)

Example 4 $500,000 Final federal funds 10,000 Carry forward from prior year (50,000) Transfer to SEOG (10%) (15,000) JLD $445,000 Subtotal federal funds (20,000) Est. literacy/math tutors $425,000 70% federal funds 182,143 30% institutional match $607,143 Subtotal ($425,000/.70) 20,000 Literacy/math tutors $627,143 Total funds to spend

Same Funds, Different Program With the same $500,000 in federal FWSP funds, depending on institutional decisions, programs range from $300,000 to $660,000. If average student earnings are $1,500, the smaller program would employ 200 students while the larger one would employ 440.

Simple Formula By gathering data for several years, you find that your institution consistently has a match that equals 27.5%. Therefore, federal dollars consistenly equal 72.5% of what you have to spend. Divide final federal allocation by percentage to arrive at a ballpark figure of what you have to spend for the year. For example: $500,000/.725 = $689,655

Notes on Simple Formula You have to have data to know the consistency of the match. Without factoring in the transfers of funds, you come up with a higher figure than any other model, but you can adjust for that. Example: Because you have data, you know that the simple formula is usually about 4% above the target figure that you need. Use simple formula and multiply result by 96%. Example: $689,655 x.96 = $662,069

Yield Offers vs. yields Average earnings Historical records of spending

Example $500,000 in federal funds; $660,000 to spend (from example 2). Of offers made, 50% (.50) accept FWS funds. Of those who accept, 75% (.75) work and have average earnings of $1,500. Equation for yield to offers:.50 x.75 =.375  $660,000/.375 = $1,760,000 to offer Equation for percentage, offers to yield: $1,760,000/$660,000= 267% You need to offer approximately $1,760,000 (or 267% of what you have to spend) to net $660,000 in earnings.

Yield and Offers Equation for number of students: $1,760,000/$1500 (average earnings) = (at least) 1,173 You know that you can fund 1,173 students that all earn exactly $1,500, but this is unlikely to happen Offer to more students, either initially or through appeals Keep records of additional funds offered (for your historical data) If, while tracking offers, you have offered too much, be prepared to reduce spending, appeals; lower JLD spending; reduce summer program; reduce transfers to other programs; take ACA from other programs You do not have to be perfect (you have some flexibility!) but you do have to be in the vicinity

Suggested Reports Federal funding over a period of years Financial Aid offers of FWSP funds for two prior years (number of students, amount of dollars) Yield figures for offers for two to three years (number of students who worked, actual earnings) FWSP expenditures for three years by pay period Community service spending for three years Separate reports for information needed for FISAP

Federal Funding Report Fisc. Yr. Fed Funds $+/- %+/ $500,000 -$180k -26% $680,000* +$270k +66% $410,000 +$ 30k + 8% $380,000 *Received ARRA funds of $300,000

Example: Report on FA Offers $660,000 Total Funds to Spend; $1,760,000 Funds to offer:  7/1 - $1,280,400 (194% of $660,000)  7/8 - $1,379,400 (209%)  7/15 - $1,775,400 (269%)  7/22 - $1,643,400 (249%)  7/29 - $1,518,000 (230%)  Looking back at Slide 25, the target for offers is approximately 267%. After July 15, the offers are falling short of the target. Some action should be taken to correct this.

Spending Reports by Pay Period Refer to example, “Overview of Spending” Records spending by pay period Tracks the amount remaining to spend for the rest of the fiscal year Tracks community service spending (to assure compliance) and literacy spending (to see if institution might qualify for supplemental funds) Compares pay period of percentage spent this year with last year and the year before

Example of Year to Year Pay Periods

Community Service & FISAP Reporting Either track manually or have systems give you verifiable information on all students who worked in community service, as well as any other information that will be required for FISAP reporting (literacy and math tutors; civic education and participation; number of students and dollars) Gather and check info throughout the year Compare it to prior years.

Check Points Know Fin Aid Cycle for Awards:  How comfortable/knowledgeable are you with award packaging for FWSP?  Do you have a way to monitor offers to compare them with your estimate of what can be offered (yield)? January-February:  You have tentative levels for following year. Do you need to make any changes in the current year program now? You can still change plans for summer and maybe the flow of financial aid offers for the upcoming award year.  If you are underspent, you may still be able to transfer 10% to the following year FWSP; transfer funds to SEOG/Perkins FCC; take ACA out of FWSP funds; move up the starting date for your summer program (or start a JLD Program!).

Check Points March-May:  Keep tracking offers for next year and spending for the current fiscal year.  Will you need to carry forward/carry back funds?  Make decisions on your summer program. June:  Do you need to release funds due to under-spending?  If so, do you need to rework your spending plan that starts July 1?  Remember that funds returned will affect spending in the future.  Do you qualify for supplemental funds?

Check Points June-August:  How are the accepted FWSP awards progressing (yield should be more evident)?  Will you need to offer more?  How is your summer spending?  If you are underspent in past fiscal year (ending June 30), August is the month in which you must return funds.  If you qualify for supplemental funds (see slide 8), August is the month to request them. You use the same form for returning unspent funds and for requesting supplemental funds. September:  Did you receive supplemental funding?  Will it change your plan significantly?

Check Points September - December:  Traditional peak payrolls. Are you spending according to plan?  Do you need to make more offers or cut off spending?  How is your community service progressing?  Where is your percentage of spending per pay period at this time of year, compared to previous years?

Returning Funds Returning Unexpended FWSP Funds(The Campus- Based Reallocation Form):  If you know that you will not be able to use all of your FWSP funds, use the Campus-Based Reallocation Form to deobligate funds in August.  You must submit this information electronically.  If you do not deobligate funds on time and you have unspent funds, they will not be returned to the FWSP. Your institution may also be subject to fines, etc.  Reference (for 09-10) onForm0910.html onForm0910.html

Impact Issues The economy Changes in other financial aid programs Changes in institutional support Changes in institutional mission or philosophy Minimum wage laws (state and federal) Changes in FWSP regulations

Reminder All of your spending plans are estimates. Your goal is to come as close as possible to spending plan. You have many opportunities to change your plan. FWSP funds management is both demanding and flexible

Summary Determine what you have to spend Determine what your yield should be (how much to offer and to how many) Collect data and analyze it Check your assumptions and spending plan throughout the year Analyze impact issues throughout the year Accept compliments on how well you manage money Become indispensible

Contact Information Sharon Welsh Director of Student Employment Rutgers, The State University of New Jersey 620 George St New Brunswick, NJ Phone: , x646