Transcript Perkin IV (3.0)

Grant Management
Responsibilities Under
Perkins
Sheara Krvaric
Brustein & Manasevit
[email protected]
1
Agenda


How to determine if a cost is
allowable
Grant management systems
2
Allowable Expenses
3
Legal Structure of Federal Programs




Statutes
 Program statute
 General Education Provisions Act
(GEPA)
Regulations
 Program regulations*
 Education Department General
Administrative Regulations (EDGAR)
OMB Circulars
Guidance*
4
Legal Structure (cont.)

*OVAE has announced it will release
non-regulatory guidance on:





Comprehensive professional
development programs
Student definitions
Measurement approaches
Data reporting
*OVAE is considering regulations
5
Helpful Questions to Ask When
Analyzing Costs


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Is the proposed cost consistent with
federal cost principles?
Is the proposed cost allowable under the
relevant program?
Is the proposed cost consistent with an
approved program plan and budget?
Is the proposed cost consistent with
program specific fiscal rules?
Is the proposed cost consistent with
EDGAR?
6
Additional Question

Is the proposed
cost consistent
with special
conditions
imposed on the
grant?
7
Practical Question

Is the proposed
cost consistent
with the
underlying needs
of the program


Data driven
decision making
Target funds to
areas of weakness
8
Federal Cost Principles
9
Federal Cost Principles

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A-21 Educational
Institutions
A-87 State, Local
& Indian Tribal
Governments
A-122 Non-Profit
Organizations
48 CFR pt. 31 ForProfit Organizations
10
Cost Principles: Basic Guidelines

All Costs Must Be:
 Necessary
 Reasonable
 Allocable
 Legal under state and local law
11
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
12
Basic Guidelines (cont.)

Necessary and Reasonable


Must be necessary for the performance or
administration of the grant
Must follow sound business practices:

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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
13
Basic Guidelines (cont.)

Practical aspects of “necessary”

Do I really need this?
Surplus property/existing resources
 Lease vs. purchase


Is this the minimum amount I need to
spend to meet my need?
14
Basic Guidelines (cont.)

Practical aspects of “reasonable”




Is the expense targeted to valid
programmatic/administrative
considerations?
Do I have the capacity to use what I
am purchasing?
Did I pay a fair rate? Can I prove it?
If I were asked to defend this
purchase, would I be comfortable?
15
Basic Guidelines (cont.)

Allocable


Can only charge in proportion to the value
received by the program
Example: Recipient purchases a computer
to use 50% in the Perkins program and
50% in a state program – can only charge
half the cost to Perkins
16
Basic Guidelines (cont.)

Practical aspects of “allocable”

Can I prove the program benefited?


E.g., time distribution records
Can I prove other programs are not
benefiting?
Ensuring only authorized use
 Incidental benefit

17
Basic Guidelines (cont.)

Legal under state and local law

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If cannot do under state law, cannot pay with
federal funds
Conform with federal law & grant terms
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
18
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
19
Basic Guidelines (cont.)

Adequately documented

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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
20
Selected Items of Cost


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Special rules for specific expenses
Still subject to basic guidelines
Examples:


Alcohol: Never allowable
Meetings and conferences: Allowable if
dissemination of technical information
21
Compensation for Personal Services

Overview of process:

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

Estimate how employee will work
Pay based on estimate
Reconcile estimates to how actually
worked
Necessary documentations


Payroll records
Time and effort records
22
Support of Salaries and Wages


Payroll must be documented in
accordance with recipient’s
generally accepted accounting
practice
Charges must be approved by a
“responsible official” of the recipient
23
Time Distribution
OMB Circular A-87/A-21



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
24
Distributing Payroll Costs
1.
Estimate how employee will work

2.
Must produce reasonable
approximations of the activity actually
performed
Quarterly comparison of estimates
to actual costs


If difference is less than 10% - annual
adjustment
If difference is more than 10% quarterly adjustment
25
Program Allowability
26
Beneficiaries

Eligible Beneficiaries


May only use Perkins funds to benefit
“CTE” students
Statute does not definite CTE
student

OVAE expected to release nonregulatory guidance on this issue
27
Beneficiaries (cont.)

Statute does define CTE – a sequence of
courses that:



Provides individuals with coherent and rigorous
content aligned to academic standards and
technical knowledge and skills necessary to
prepare for current or emerging professions
Provides technical skill proficiency, an industryrecognized credential, a certificate, or an
associate degree
Includes competency-based applied learning
28
Beneficiaries (cont.)

Definition of CTE now allows
prerequisite courses, but not
remedial courses

Significant change
29
Use of Funds
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All costs must improve CTE
9 required uses of funds

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Activities for special populations moved
from permissive to mandatory
20 permissive uses of funds
5% cap on administration
30
Use of Funds (cont.)

Improve:

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Modernize
Revise
Expand
Upgrade
In no instance, maintain an existing
activity
Guidance: “3 year” rule
31
Use of Funds (cont.)
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New permissive uses of funds:

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Develop and expand postsecondary
offerings
Entrepreneurship
Small, career-themed learning
communities
Automotive technologies
Fund pooling for innovative activities
32
Approved Plan & Budget
33
Changes in Local Plan Provisions

Eligible recipients must develop
local plans that include all of the
Perkins III elements PLUS:

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At least one programs of study
Career guidance and academic
counseling
Recruitment and retention of career
and technical education personnel
34
Timing

Cannot begin to obligate funds
until:


PED approves application
PED determines application is
substantially approvable
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Reimbursement subject to final approval
Pre-award costs

Prior approval required
35
Modification
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May require prior approval

Budget changes

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10% or $10,000 (state may modify)
Program changes
Change in scope or object
 Change in key personnel
 No cost extension
 Contract with 3rd party to administer
program

36
Program Specific Fiscal Rules
37
Supplement Not Supplant
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Cannot use federal funds to pay for
services, staff, programs, or
materials that would otherwise be
paid with state or local funds
Designed to ensure federal funds
pay for something “extra”
38
Presumptions

Presume supplanting in 2
situations:
1.
2.
Used federal funds to provide services
the recipient is required to make
available under other federal, state or
local laws
Used federal funds to provide services
the recipient provided with state or
local funds in the prior year
39
Rebutting the Presumption

Presumption may
be rebutted:
 If recipient
demonstrates it
would not have
provided the
services with
state or local
funds if the
federal funds
were not
available
40
Rebutting the Presumption (cont.)

To rebut presumption show:

Fiscal and programmatic
documentation to confirm that, in the
absence of federal funds, would have
eliminated staff/services in question
State or local legislative action
 Budget histories and information
 Planning documents

41
EDGAR
42
Use of Funds for Religion

Cannot use federal funds for:


Religious worship, instruction or
proselytization
Construction, remodeling, repair,
operation, or maintenance of religious
facility
43
Real Property and Construction

Unless authorized
by statute, cannot
use federal funds
for:


Acquisition of real
property
Construction
44
Indirect Costs
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Must have
approved rate
Be aware of
administrative
caps
Be aware of
restricted vs.
unrestricted rates
45
Grants Management Systems
46
“New” Developments

Developments at federal level:
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Developments at state/local level
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Improper Payment Act of 2002
Federal Managers’ Financial Integrity Act of
1982
High profile fraud and abuse
Concerns about quality of single audits
Leading to an increased focus on systems
requirements
47
Federal Program Monitoring (cont.)

Three major
“systems” in
grants
management:



Financial
Management
Inventory
Management
Procurement
48
Systems Requirements
What Rules Apply?

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Overall, must use fiscal control and
fund accounting procedures that will
ensure the proper disbursement of,
and accounting for, federal funds
Specific rules in EDGAR
49
Financial Management
50
FMS Rules
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7 requirements:
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Financial Reporting
Accounting Records
Internal Control
Budget Control
Allowable Cost
Source Documentation
Cash Management
51
FMS Rules (cont.)
Financial Reporting

Accurate, current and complete disclosure
of financial information



All financial reports required by ED (and State)
Consistent with GAAPs
NCES Manual: Financial Accounting for
Local and State School Systems


Chapter 5: Financial Reporting
http://nces.ed.gov/pubs2004/h2r2/ch_5_1.asp
52
FMS Rules (cont.)
Accounting Records
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Must identify source and application of funds
(expenditure level detail)
Must contain information related to:

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Award amount
Authorizations
Obligations
Unobligated balances
Assets
Liabilities
Outlays or expenditures
Income
Interest
53
FMS Rules (cont.)
Internal Controls


ED is subject to
laws requiring it to
monitor internal
controls
Single auditors are
required to test
internal controls
54
FMS Rules (cont.)
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
55
FMS Rules (cont.)
Objectives of Internal Control
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Effectiveness and efficiency of
operations
Reliability of financial reporting
Compliance with applicable laws and
regulations
Safeguarding assets
56
FMS Rules (cont.)
Components of Internal Control
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Control
Environment
Risk Assessment
Control Activities
Information and
Communications
Monitoring
57
FMS Rules (cont.)
Budget Control

Must compare
actual
expenditures to
budgeted amounts
on a routine basis
58
FMS Rules (cont.)
Allowable Cost

Must follow applicable cost principle
to determine reasonableness,
allowability, and allocability of all
costs

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

A-21 Educational Institutions
A-87 State, Local & Indian Tribal
Governments
A-122 Non-Profit Organizations
48 CFR pt. 31 For-Profit Organizations
59
FMS Rules (cont.)
Source Documentation

Type of documents:
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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
60
FMS Rules (cont.)
Cash Management

Obligation =
Transaction that
requires payment
61
FMS Rules (cont.)
Cash Management (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
62
FMS Rules (cont.)
Cash Management (cont.)


Every grant has a “period of
availability” = period in which
grantee can obligate funds
ED cannot extend the period of
availability
63
FMS Rules (cont.)
Cash Management (cont.)

Liquidation =
Settle an
obligation by
paying funds
64
FMS Rules (cont.)
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
65
Procurement
66
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
67
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
68
Open Competition (cont.)

Situations that restrict competition:

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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
69
Role of Cost/Price

All costs must be
reasonable:



Fair market value
Arms length
bargaining
Act with prudence
under the
circumstances
70
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
71
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
72
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
73
Vendor Selection Process (cont.)

Method of procurement:




Small purchase procedures
Competitive sealed bids
Competitive proposals
Noncompetitive proposals
74
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
75
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
76
Vendor Selection Process (cont.)

As a practical
matter,
noncompetitive
contract raises
“red flags”

Ensure persuasive
and adequate
documentation to
facilitate audit
77
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
78
Vendor Selection Process (cont.)



Cannot contract
with vendor who
has been
suspended or
debarred
Must check if
contract is
$25,000 or more
http://www.epls
.gov/
79
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
80
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
81
Contract Administration (cont.)

Must maintain a
contract
administration
system that
ensures
contractors
perform in
accordance with
the terms,
conditions, and
specifications of
the contract
82
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)
83
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
84
Inventory Management
85
Inventory Management


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
86
Inventory Management (cont.)
Equipment

Must have adequate controls in
place to account for:



Location of equipment
Custody of equipment
Security of equipment
87
Inventory Management (cont.)
Equipment (cont.)

Property records


Physical inventory


Description, serial number or other ID, title
info, acquisition date, cost, percent of federal
participation, location, use and condition, and
ultimate disposition
At least every two years
Control system to prevent loss, damage,
theft

All incident must be investigated
88
Inventory Management (cont.)
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:


If over $5,000 – pay ED’s share
If don’t want to keep – obtain
disposition instructions
89
Inventory Management (cont.)
Supplies



Must maintain effective control and
accountability
Must adequately safeguard all such
property
Must assure that it is used solely for
authorized purposes
90
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information and does not constitute legal advice or a
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91