Transcript USDA CSREES UPDATE

Formula Grants
Formula grants are Federally
appropriated dollars which are allocated
annually to the 50 States and Insular
Areas for the purpose of continuing
agricultural research and extension
activities.
Formula Fund Programs

Research (1862 and 1890 LGIs)
 Hatch
Act of 1887
 McIntire-Stennis Act of 1962
 Evans-Allen (Section 1445 of the National
Agriculture Research, Extension, and Teaching
Policy Act of 1977 - NARETPA)
 Animal Health & Disease Research
 (Section 1433 – NARETPA,1977)
Formula Fund Programs

Extension (1862 and 1890 LGIs)
 Smith-Lever
Act of 1914
 Section 1444 of NARETPA, 1977
 Renewable Resource Extension Act of 1978
(RREA)

Education (1994 LGIs)
 Equity
in Educational Land-Grant
Status Act of 1994 Program
Hatch Act Funds

Recipients:
State Agricultural Experiment Stations in 50
States, DC, Guam, Puerto Rico, the Virgin
Islands, Micronesia, American Samoa, and
Northern Marianas Islands
Hatch Act Funds

Matching:
 100% for 1862
LGIs on Hatch Regular and
Multi-state Research funds
 Insular 1862s must match 50% of their FY
2002 allocation, and thereafter. Matching
waivers may be requested.
Hatch Act Funds

Carryover:

100% may be carried over for one full year.

Funds must be expended by the end of the
second year.
FINANCIAL ADMINISTRATION
ALLOWABLE COSTS

Factors Considered:

Reasonable

Allocable

Applied Consistently

Limited by regulations-OMB Circular A-21 (Cost
Principles for Educational Institutions) and
Administrative Manual for the Hatch (Experiment
Station) Act as amended.
REASONABLE:

Recognized as necessary

Meets the terms and conditions of the Federal
statute and Plan of Work/agreement

Market prices for comparable goods/services

Acted with due prudence in responsibility

Consistent with the institution’s policy
ALLOCABLE:

It was purchased solely to benefit the project or program
 If it benefits more than one project, costs must be allocated on any
reasonable basis (adopted by the institution) which is applied
consistently

Costs may not be shifted from one project to another to cover budget
shortfalls or overruns

Costs allocable to industry or foreign governments may not be shifted to
Federal awards

Internal Controls-no “one” person has control over all aspects of a
transaction
APPLIED CONSISTENTLY

Reasonable method adopted by institution

Documented
LIMITED BY:

Applicable Federal Statute

Agency Administrative Guidance


Cost principles in OMB Circular A-21,
A-87, A-110
Code of Federal Regulations (Title VII)
FINANCIAL MANAGEMENT AND ACCOUNTING OPERATIONS

Accountability shall be based on the total annual
Hatch program conducted by each station, rather
than on individual projects.

Examinations in the form of audits or internal audits
are required to occur not less than every two years.
Generally, examinations conducted on a university
wide basis to test the fiscal integrity of financial
transactions, as well as compliance with the terms
and conditions of Federal grants and other
agreements will meet the requirements of the Act.
UNALLOWABLE COSTS:








Entertainment costs
Fines or penalties
Goods and services for personal use
Housing and personal living expenses
Indirect costs/overhead
Insurance against defects
Legal expenses
Lobbying
UNALLOWABLE COSTS

Advertising and public relations costs








Except: hiring staff, procurement, disposal; etc.
Airfare costs (excessive amounts)
Alcoholic beverages
Alumni activities
Bad debts
Commencement costs
Contingency provisions
Donations and contributions
UNALLOWABLE COSTS

Memberships in civic, social, or community organizations

Recruitment costs (excessive)

Salaries related to classroom instruction

Selling and marketing expenses

Student activity costs

Tuition

Volunteer services

Any other costs deemed unallowable by statute, regulation, or
policy
DOCUMENTATION STANDARDS

Costs must be reasonable, allocable, and allowable

Internal controls (no “one” person has control over
all financial aspects of a transaction)

Reasonable method of allocation

Must meet the requirements of A-110, Grants and
Agreements with Institutions of Higher Education, Hospitals,
and Other Non-profit Organizations
RECORD RETENTION

All records pertinent to an award must be
retained for 3 years from the date of
submission of the Final SF-269, Financial
Status Report




Financial records
Supporting documents
Statistical records
All other pertinent records
EXCEPTIONS

Unless litigation, an audit, or other claim is
initiated prior to the termination of the 3 year
period. (Keep until resolved.)

Records for real property & equipment must be
retained for 3 years after final disposition
MATCHING FUNDS

Contributions may be included when the following are met:







Verifiable in the records
Not included as contributions for other Federal
awards
Necessary and reasonable for the project
Allowable under the Cost Principles
Non-Federal funds (donations)
Are in the approved budget
Conform to other provisions of OMB Circulars
Matching requirements
The Hatch program is exempt from the
indirect cost provision of OMB Circular A-21.
Accordingly, indirect costs are not allowable
as contributions in satisfying the matching
requirements.
TRAVEL

Research Formula funds: Approval delegated
to Research Director/A-TR for both domestic
and foreign travel.
JOINT/SPLIT APPOINTMENTS

Costs included





Activities directly related to the project
Writing reports or articles
Participating in seminars and meetings
Consultations
Costs for salaries and fringe benefits are
determined by time and effort reporting.
FRINGE BENEFITS

Contributions to LGI retirement systems is
limited to 5% of the salaries paid from
formula funds

Health Insurance program

Unemployment Compensation

Workman’s Compensation
CAPITAL EXPENDITURES:



Equipment purchases of $5,000 or over,
should be capitalized for all formula
funds.
New construction or renovations – not
allowed with extension funding
Use the depreciation method normally used
by UC for the asset type
PROPERTY DISPOSAL

When replacing a vehicle, one vehicle may be used as a trade-in
to offset the cost of a new vehicle purchased with formula funds

When vehicles or equipment ($5,000 value and more) are no
longer needed for the project, LGI may retain provided Federal
awarding agency or it’s successor is compensated (7CFR 3019.34)

Equipment with a unit acquisition cost of less than $1,000, may
be sold or retained with no further obligation to the Federal
government (7 CFR 3015.168)

Otherwise, contact CSREES for disposition instructions
Program Income

Royalties from copyrights or patents resulting from
research conducted with Federal formula funds are not
considered program income and represent no
obligation to the Federal government

Proceeds from the sale of real or personal property
purchased in whole or part with Federal funds (7 CFR
3015.168)

All other program income shall be retained by the LGIs
and used to further program objectives

Program income is not acceptable as matching funds
There are three types of reporting
requirements for these funds:



Plan of work
CRIS
Financial Reporting
Plan-of-Work Reporting

1) Considers the entire portfolio of agricultural research and
extension formula funds awarded to each 1862 and 1890 land-grant
institution.

Each 1862 and 1890 land-grant institution is required to submit every
five years a plan of work for their agricultural research and extension
formula funds authorized under the Hatch Act, Smith-Lever Act, and
sections 1444 and 1445 of the National Agricultural Research,
Extension, and Teaching Policy Act.

Every year LGI’s are required to submit an Annual Report of
Accomplishments and Expenditures.
Current Research Information System
(CRIS)
Reporting is done on a project basis. Hatch
research projects are submitted for approval
to CSREES by the state agricultural
experiment stations (SAES).
Each year SAESs submit to the CRIS office a
progress report and an expenditure report for
all the Hatch projects they supported in the
previous year.
Financial Reports

Certification of Offset (Form CSREES-2103) which is completed
by the SAES's to certify that matching funds have been made
available;

b) SF-272, Federal Cash Transaction Report, which is submitted
on a quarterly basis through the U.S. Department Health and
Human Services' Payment Management System (DHHS-PMS);
and

c) SF-269, Financial Status Report, which is submitted on an
annual basis to the Funds Management Branch by December 31st,
for the reporting period of October 1st through September 30th.
AREERA Requirements

The Agricultural Research, Extension, and Education Reform Act
of 1998 (AREERA) amended the Smith-Lever Act, the Hatch Act,
and the National Agricultural Research, Extension, and Teaching
Policy Act of 1977 (the funding authorities for Extension and
Research activities) to require approved Plans of Work from
Extension and Research in order to receive federal funding.

The AREERA Plans of Work pertain only to the Smith-Lever
3(b)&(c), Hatch, Evans-Allen, and 1890 Extension funds. Other
funding authorities such as the Smith-Lever 3(d), NRI, and other
grants and project funds will continue to require plans or
proposals for their continued distribution of funds.
Hatch Act Funds

Use must meet AREERA requirements:
Section 204 of AREERA added Section I to the Hatch Act,
which states that states must expend for integrated
research and extension activities in FY 2000 and thereafter
a percentage that is equal to the lesser of 25 percent or
twice the percentage of funds expended by the institution
for integrated research and extension activities in FY 1997.
(This section also require that the institutions include in the
plan of work a description of the manner in which they will
meet these multi-state and integrated requirements.)
UC Next Steps ….

To meet the increased accountability
requirements on the use of Hatch Funds, new
accounts and funds will be used to record
Hatch expenditures.

Beginning October 1, 2006 expenditures will
be charged directly to the new accounts and
funds.
UC Next Steps ….
Separate OP fund numbers have been set-up to
track expenditures for:




Regular Hatch
Multi-state Hatch
Integrated Hatch
Multi-state / Integrated Hatch
Contact Information:
Jo Ann Javier
Director, Financial Services
UCOP – ANR
Tel:
510-287-3350
E-mail: [email protected]