Transcript Florida Department of Education Division of Vocational

Florida Department of Education
Division of Vocational
Rehabilitation
Grants Management Workshop
Michael Brustein, Esq.
Brustein & Manasevit
3105 South Street, NW
Washington, DC 20007
[email protected]
www.bruman.com
1
Federal Rules That Apply to the State
Vocational Rehabilitation Program
1. EDGAR
2. VR Program Regulations
3. WIA Regulations
2
EDGAR
http://www.ed.gov/policy/fund/reg/edgarReg/
edgar.html
 Part 74 – Administration of Grants
with Nonprofits
 Part 76 – State-Administered
Programs
 Part 77 – Definitions
 Part 79 – Intergovernmental Review
 Part 80 – Uniform Administrative
Requirements*
3
EDGAR cont…




Part
Part
Part
Part
81
82
85
86
–
–
–
–
Enforcement
Lobbying
Debarment and Suspension
Drug and Alcohol Abuse
4
EDGAR Part 80
1. High Risk Grantees
2. Standards for Financial
Management
3. Payments
4. Allowable Costs
5. Availability of Funds
6. Cost Sharing
7. Program Income
8. Non-Federal Audit
9. Changes
10.Real Property
11.Equipment
12.Supplies
13.Copyright
14.Debarment
15.Procurement
16.Monitoring
17.Financial Reporting
18.Retention of Records
5
VR Program Regulations
 Part 361 – State VR Services
Program
 Part 363 – State Supported
Employment Services
 Part 364 – General Provisions
 State Independent Living Services Program
 Centers for Independent Living Programs
6
VR Program Regulations cont…
 Part 365 – State Independent Living
Services
 Part 366 – Centers for Independent
Living
 Part 367 – Independent Living
Services for Older
Individuals who are Blind
 Part 369 – VR Service Projects
 Part 370 – Client Assistance Program
7
WIA Regulations
 20 CFR Part 662
 One-Stop Service Delivery System
 29 CFR Part 37
 DOL Non-discrimination Regulations
If VR activities are conducted as part of
the One-Stop System
8
Legal Structure of
Federal Programs
 Statutes
 Program statutes (VR, WIA)
 General Education Provisions Act (GEPA)
 Regulations
 Program regulations
 Education Department General
Administrative Regulations (EDGAR)
 OMB Circulars
 Guidance
9
VR/WIA Crosswalk
State VR unit must carry out the following:
1. Make core services available to VR participants
through the One-Stop System
2. Use a portion of the VR funds to
a. Create and maintain the One-Stop service
delivery system
b. Provide core services
3. Enter into MOU with WIB
4. Participate in the organization of the One-Stop
System consultant with MOU
5. Provide representation on local WIB
300 CFR 361.23
10
Resource Sharing / Cost Sharing
under VR/WIA
11
The One-Stop is not a direct
recipient of federal funds. It is a
location through which several
federal programs operate their
programs
12
One-Stop partner programs
must maintain appropriate
accounting of federal funds.
13
In the One-Stop environment,
some costs benefit more than
one program or organization.
14
Costs must be allocated to the
benefiting program – based on
benefits received, not availability
of funds.
15
No one partner should pay a
disproportionate share of the
One-Stop costs.
16
Cost Pooling- distributes both
shared direct and indirect costs,
and involves the accumulation of
costs to pools for later allocation
to final cost objectives.
17
Appropriate to use cost pooling if
direct charging requires
disproportionate effort to
determine the precise charge to the
individual cost objective
used for common costs in a OneStop.
18
Once costs are accumulated in the OneStop, they must be allocated to the
benefiting programs.
e.g.  % of salary costs / time assigned to
activities
 % of units of service provided
 % of usage of space
19
Application of A-87
Attachment A, paragraph C.3
 When an item of cost is allowable
under and allocable to two or more
awards, the costs may be charged
to:
1. Any one of the awards
2. All of the awards based on benefits
received
3. Awards based on mutually agreeable
methodology
20
A program that does not
benefit from the cost
cannot pay for it
Cost Shifting
21
Helpful Questions to Ask
 Is the proposed cost consistent with
federal cost principles?
 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
EDGAR?
22
Federal Cost Principles
http://www.whitehouse.gov/omb/circulars/
 A-21 Educational
Institutions
 A-87 State, Local & Indian
Tribal Governments
 A-122 Non-Profit
Organizations
 48 CFR pt. 31 For-Profit
Organizations
23
Cost Principles: Basic Guidelines
 All Costs Must Be:
 Necessary
 Reasonable
 Allocable
 Legal under state and local law
24
Basic Guidelines (cont.)
 In addition, all costs must:
 Conform with federal law & grant
terms
 Consistently treated
 In accordance with GAAP
 Not included as match
 Net of applicable credits
 Adequately documented
25
Basic Guidelines (cont.)
 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
26
Basic Guidelines (cont.)
 Allocable
 Can only charge in proportion to the value
received by the program
 Example: One-Stop purchases a computer
to use 50% in the VR program and 50%
WIA Title I Program – can only charge half
the cost to VR
 Legal under state and local law
 If cannot do under state law, cannot pay
with federal funds
27
Basic Guidelines (cont.)
 Conform with federal law & grant
terms
 Example: Match Requirements
 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
28
Basic Guidelines (cont.)
 In accordance with GAAP
 Not included as match
 Net of applicable credits
 Examples: purchase discounts, rebates
or allowances, recoveries or indemnities
on losses, insurance refunds or rebates,
adjustments of overpayments
29
Basic Guidelines (cont.)
 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
30
Federal Cost Principles: Selected
Items of Costs
 43 specific costs detailed
 Listed in alphabetical order
31
Selected Items of Cost (cont.)
 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
32
Selected Item of Cost (cont.)
 Salaries and Wages
 Allowable if proper time distribution records
 Fringe Benefits
 Allowable if: (1) established written leave
policies; (2) cost equitably allocated to all related
activities; and (3) accounting basis consistently
followed
 Severance Pay/Terminal Leave
 Normal: Allowable as indirect cost
 Abnormal: Allowable if approved by cognizant
federal agency
33
Compensation for Personal Services
 Overview of process:
 Estimate how employee will work
 Pay based on estimate
 Reconcile estimates to how actually
worked
 Necessary documentations
 Payroll records
 Time and effort records
34
Support of Salaries and Wages
 Payroll must be documented in
accordance with grantee/subgrantee’s
generally accepted accounting
practice
 Charges must be approved by a
“responsible official” of the
grantee/subgrantee
35
Time Distribution
OMB Circular A-87
 If federal funds are used for salaries
“time and effort records” must be
kept
 Must demonstrate that employees
paid with federal funds actually
worked on the specific federal
program
 Applies to all employees who are paid
with federal funds
36
General Requirement
 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
37
Cost Objective
 Multiple cost objectives:
 More than one Federal award
 A Federal award and a non-Federal award;
 A Federal award with specific earmarking (setasides) or matching requirements;
 An indirect cost activity and a direct cost
activity;
 Two or more indirect activities which are
allocated using different allocation bases; or
 An unallowable activity and a direct or indirect
cost activity.
38
Single Cost Objective
 If an employee works on a single cost
objective:
 Semi-Annual Certification
 Signed by employee or supervisor every
six months
 Example: “I hereby certify that for the
period January 1, 2005 through June 30,
2005 one-hundred percent (100%) of
my time and effort was spent on VR
Administration.”
39
Definition of “Administrative Costs
Under the State Plan”
1. Quality Assurance
2. Budgeting, Accounting, Financial
Management, Information Systems,
Data Processing
3. Providing Information to Public
4. T/A to other state agencies,
nonprofits, businesses, except those
not subject to ADA
40
Definition of “Administrative Costs
Under the State Plan” cont…
5. State Rehab Council and Other
Advisory Committees
6. Professional Organization
Membership Dues for Designated
State Unit Employees
7. Removal of Architectural Barriers in
State VR Facilities
8. Operating and maintaining State unit
facilities, equipment , grounds
41
Definition of “Administrative Costs
Under the State Plan” cont…
9. Supplies
10.Personnel Development
11.Admin Salaries
12.Travel costs related to carrying out
the program, other than travel costs
related to provision of services
13.Costs of Eligibility Determinations,
Mediations, Due Process Hearings
14.Legal Expenses
42
Single Cost Objective (cont.)
Flexibility
 Payroll certification in lieu of semiannual certification
1. Single cost objective
2. Supervisor cannot assign multiple functions
3. Employee coded to dedicated function not
benefiting multiple functions
43
Multiple Cost Objectives
 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 (cont.)
 Time increments reported on PARs
should be sufficient to recognize:
 Number of different activities performed
 The dynamics of these responsibilities
45
Sample PAR
46
Sample PAR
47
Flexibility
 Substitute systems
 Must be approved by state (if ED
has approved state procedures)
 Can include:
 Random moment sampling
 Case counts
 Other quantifiable measures of
employee effort
48
Distributing Payroll Costs
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
49
Selected Items of Cost (cont.)
 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
50
Selected Items of Cost (cont.)
 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
51
Selected Items of Cost (cont.)
 Lobbying
 Costs of activities that are meant to influence the
grant process are unallowable
 Maintenance, Operations & Repairs
 Utilities, insurance, security, janitorial services,
elevator service, upkeep of grounds, necessary
maintenance, normal repairs & alterations are
allowable if:
1. Keep property in efficient operating condition
2. Do not add to permanent value or
appreciably prolong property’s intended life
52
Select Items of Cost (cont.)
 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
53
Selected Items of Cost (cont.)
 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
54
Financial Management
55
Understanding the Nature of the
Federal Funding




Cooperative Agreement
Direct Grant
Subgrant
Contract
56
Nature of Funding
 Cooperative Agreement
 Very similar to a grant
 Substantial involvement is expected
between the executive agency and
recipient
57
Nature of Funding (cont.)
 Direct Grant (e.g., funds received
directly from ED)
 Very similar to a cooperative agreement
 No substantial involvement between
agency and recipient – allowable
activities based on applicable statute,
approved project plan
58
Nature of Funding (cont.)
 Subgrant (e.g., pass-through funds from
state administered program)
 Allowable activities based on applicable statute,
local plan, state rules
59
Nature of Funding (cont.)
 Contract
 Allowable activities based on terms and
conditions of contract
 Management rules:
 Terms of the contract
 State contract law
60
Subgrant vs. Contract
 Sugrantee
 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
61
Subgrant vs. Contract (cont.)
 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
62
What rules apply to matching
under VR?
63
Sec. 111(a) of
Rehabilitation Act
The Commissioner shall pay to
a state an amount equal to
the federal share of the cost of
VR services under the plan,
including expenditures for
administration of the plan.
64
The Federal Share is
78.8%
65
Nonfederal share –
Subject to:
34 CFR 80.24 of EDGAR
66
But third party in-kind
contribution may not be used
Cash contributions by private
entities generally may be used as
match
361.60
67
FMS Rules for States
34 CFR 80.20(a)
 State may follow
own laws and
procedures, as long
as FMS sufficient
to:
 Permit preparation
of all required
reports
 Permit tracing of
funds to specific
expenditures
68
FMS Rules for
Grantees/Subgrantees
34 CFR 80.20(b)
 “All other grantees
and subgrantees”
must implement an
FMS that meets 7
specific requirements
69
FMS Rules for
grantees/subgrantees
 7 requirements:







Financial Reporting
Accounting Records
Internal Control
Budget Control
Allowable Cost
Source Documentation
Cash Management
70
Financial Reporting
 Accurate, current and complete disclosure
of financial information
 All financial reports required by ED
 Consistent with GASB Rule 34
71
Accounting Records
 Must identify source and application of funds
(expenditure level detail)
 Must contain information related to:
 Award amount
 Authorizations
 Obligations
 Unobligated balances
 Assets
 Liabilities
 Outlays or expenditures
 Income
72
Internal Controls
 ED is subject to laws
requiring it to monitor
internal controls
 Improper Payment Act of
2002
 Federal Managers’ Financial
Integrity Act of 1982
 Single auditors are required
to test internal controls
73
Internal Controls
 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
74
Objectives of Internal Control
 Effectiveness and efficiency of
operations
 Reliability of financial reporting
 Compliance with applicable laws and
regulations
 Safeguarding assets
75
Budget Control
 Must compare
actual expenditures
to budgeted
amounts on a
routine basis
76
Allowable Cost
 Must follow applicable cost principle
to determine reasonableness,
allowability, and allocability of all
costs
 A-21 Educational Institutions
 A-87 State, Local & Indian Tribal
Governments
 A-122 Non-Profit Organizations
 48 CFR pt. 31 For-Profit Organizations
77
Source Documentation
 Type of documents:





Canceled checks (or similar bank record)
Paid bills
Payrolls
Time and attendance records
Contract and subaward documents
 Electronic copies ok
 Must retain for at least 3 years, but statute
of limitations = 5 years
78
Cash Management
79
Cash Management
 Payment Process




Obligation
Liquidation
Drawdown
Payment
80
Obligations
34 CFR 76.707, 34 CFR 80.23
 Obligation = Transaction that
requires payment
81
Obligations (cont.)
Acquisition of Property
Date of binding
written commitment
Personal Services
by Employee
When services
are performed
Personal Services
by Contractor
Date of binding
written commitment
Travel
When travel is taken
82
Obligations (cont.)
 Every grant has a “period of
availability” = period in which grantee
can obligate funds
 In general, ED cannot extend the
period of availability
83
Obligations (cont.)
 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
 Pre-award costs
 Only for obligations made after the period of
availability begins but before application
approved
 Must have prior approval from awarding agency
84
Obligations (cont.)
 Tydings Amendment
 Allows extra year to obligate funds
 Does not apply to all grants
 Under Tydings, funds are available for 2427 months:
 12-15 months under the grant award
(July 1, 2006 – September 30, 2007)
 Plus 12 months
(October 1, 2007 – September 30, 2008)
85
Obligations (cont.)
 In order to have a valid “obligation” there
must be:
A transaction giving rise to an obligation within
the period of availability; and
 A “linking” of the transaction with funds that
were available during the period of availability.

 “Linking” a transaction to particular grant
funds can occur long after the period of
availability ends
86
Obligations (cont.)
 “Linking” example:
 Transaction occurs on August 1, 2005
 Available funds include:
 2003-2004 Funds (became available
7/1/03)
 2004-2005 Funds (became available
7/1/04)
 2005-2006 Funds (became available
7/1/05)
87
Liquidations
34 CFR 80.23
 Liquidation = Settle an
obligation by paying funds
88
Cash Management (cont.)
 State must liquidate all obligations
within 90 days after the end of the
period of availability
 Example:
 Period of availability: July 1 – September
30
 Liquidation period ends: December 30
 State may impose shorter deadline on
subgrantee
89
Liquidations (cont.)
 Lapsed funds is a risk factor
 To avoid lapsing:
 Obligate oldest funds first
 First In First Out (FIFO) method of
accounting
 Remember – “linking”
90
Payments
 Special rules if receive advance
payment
 Must expend funds within 3-days
 Must maintain written procedures for
timing drawdowns and payments
 Interest must be paid back to ED (over
$100)
91
Procurement
92
Rules for States
34 CFR 80.36(a)
 States may use
their own policies
and procedures to
procure goods and
services
 But, must include
required provisions
in all contracts
supported with
federal funds
93
Rules for Grantees/Subgrantees
 All other grantees
and subgrantees
must follow policies
and procedures
that meet the
standards set out
in 34 CFR
80.36(b)-(i)
94
Ensuring Purchases are
Necessary
 All costs have to be necessary for the
performance or administration of the federal
grant
 Therefore, must review all proposed
purchases to avoid unnecessary or
duplicative items
 Surplus property
 Structure procurement to obtain most economical
purchase
 Intergovernmental agreement for common goods or
services
 Lease vs. purchase
95
Open Competition
 All procurement transactions must be
conducted with full and open
competition:
 Must have written code of conduct for all
employees engaged in the award and
administration of contracts (must
address conflicts of interest)
 Must have protest procedures to handle
disputes
96
Open Competition (cont.)
 Situations that restrict competition:
 Unreasonable requirements on vendors to
qualify to do business
 Pre-qualified lists should not limit competition
 Requiring unnecessary experience or excessive
bonding
 Noncompetitive pricing practices
 Noncompetitive awards to consultants on
retainer
 Organizational conflicts of interest
 Specifying a brand name
 In-state or local preferences
97
Role of Cost/Price
 All costs must be reasonable:
 Fair market value
 Arms length bargaining
 Act with prudence under the
circumstances
98
Role of Cost/Price (cont.)
 Must perform a cost or price analysis
in connection with every procurement
action, including contract
modifications
 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
99
Role of Cost/Price (cont.)
 Method and degree of cost or price
analysis depends on the particular
facts and circumstances
 Must make independent estimate
before receiving bids or proposals
 Goal of analysis is to determine
reasonableness
100
Vendor Selection Process
 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
101
Vendor Selection Process
(cont.)
 Method of procurement:




Small purchase procedures
Competitive sealed bids
Competitive proposals
Noncompetitive proposals
102
Vendor Selection Process
(cont.)
 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
 After soliciting a number of sources,
competition is deemed inadequate
103
Vendor Selection Process
(cont.)
 Must perform a cost analysis
in connection with every
noncompetitive contract
 Must ensure contractor price is
reasonable
 Must ensure contractor not using
market power to force higher price
104
Vendor Selection Process
(cont.)
 As a practical matter,
noncompetitive contract raises
“red flags”
 Ensure persuasive and adequate
documentation to facilitate audit
105
Vendor Selection Process
(cont.)
 Can only contract with responsible
contractors possessing the ability to
perform successfully:




Contractor integrity
Compliance with public policy
Record of past performance
Financial and technical resources
106
Vendor Selection Process
(cont.)
 Retain records to document:
 Rationale for the method of
procurement
 Selection of contract type
 Contractor selection or rejection
 Basis for contract price
107
Contract Administration
 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
108
Contract Administration (cont.)
 Must maintain a contract
administration system that
ensures contractors perform
in accordance with the
terms, conditions, and
specifications of the contract
109
Contract Administration (cont.)
 As a practical matter:
 Must have written contracts (purchase order
ok)
 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)
110
Contract Administration (cont.)
 As a practical matter (cont.)
 Must have written invoice
 Description of services performed or goods delivered
 Description of dates services were performed or
goods delivered
 Description of location services were performed or
goods delivered
 Description of students/teachers/etc. served (if
applicable
 Invoice should be reviewed & approved before
payment
 Segregation of duties
 Documented approvals
111
Inventory Management
112
Rules for States
34 CFR 80.32(b)
 States may use their own policies and
procedures to use, manage, and
dispose of equipment
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Inventory Management
34 CFR 80.32
 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
 Supplies
 Everything else
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Equipment
 Must have adequate controls in place
to account for:
 Location of equipment
 Custody of equipment
 Security of equipment
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Equipment (cont.)
 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
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Equipment (cont.)
 Must protect against unauthorized
use
 May use for other projects as long as use
is incidental and does not interfere
 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
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Supplies
 Must maintain effective control and
accountability
 Must adequately safeguard all such
property
 Must assure that it is used solely for
authorized purposes
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This presentation is intended solely to
provide general information and does
not constitute legal advice.
Attendance at the presentation or later
review of these printed materials does
not create an attorney-client
relationship with Brustein & Manasevit.
You should not take any action based
upon any information in this
presentation without first consulting
legal counsel familiar with your
particular circumstances.
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