Federal Grant Management

F E D E R A L P R O G R A M S W O R K S H O P N O V E M B E R 1 5 , 2 0 1 1 J A N S T A N L E Y , S T A T E T I T L E I D I R E C T O R

Legal Structures for Federal Programs

2     Statutes/Legislation  Program Statutes (NCLB, IDEA, Perkins)  General Education Provisions Act (GEPA) Regulations   Program Regulations Education Department General Administrative Regulations (EDGAR) Office of Management and Budget Circulars Guidance  Non-Regulatory Guidance

Federal Grants Management Resources

 Program Guidance:    Statutes Regulations Guidance 3 www.ed.gov

 General Education Provisions Act (GEPA): http://www.law.cornell.edu/uscode/20/usc_sup_01_20_1 0_31.html

 Education Department General Administrative Regulations (EDGAR): http://www.ed.gov/policy/fund/reg/edgarReg/edgar.html

Federal Grants Management Resources

4  Office of Management & Budget (OMB) Circulars: http://www.whitehouse.gov/omb/circulars  Circular A-87 principles for allowable costs  Circular A-122-cost principles for non-profit organizations  Circular A-133 Compliance Supplement-audit

What Rules Apply to Utilizing Federal Funds?

5 State and local agencies must demonstrate fiscal control and accounting procedures to ensure the proper disbursement of and accounting for federal funds.

 Section 76 of EDGAR  Section 80 of EDGAR

Who or What is EDGAR?

6

Education Department General Administrative Regulations

(EDGAR)

Financial Management Requirements

7 All grantees and sub grantees must implement the requirements and maintain systems that meet specific requirements of EDGAR.

Financial Management Requirements

8 o

EDGAR Section 76

Eligibility to receive subgrants o Distribution of funds by formula or competitive o Private faith-based organizations eligible to receive funds o State consolidated grant application to ED o Assurance statements o Ability for the SEA to reallocate funds based on specific federal program

Financial Management Requirements

9 o o o o o EDGAR Section 76 (continued) LEA grant application and budget approved by the SEA prior to the issuance of a grant and the expenditure of funds Approval process SEA must provide a grant award that indicates the amount of the subgrant, obligation period and any requirements that apply to the specific federal program (scope and conditions) Consultation with and services for private school students Application guidelines for private schools

Financial Management Requirements

10 EDGAR Section 76 (continued) o Calculation and approval of indirect cost rates (restricted) o Coordination of the federal funds with other programs that serve the same populations (Braiding of funds Title I, Title II and Title III) o Program evaluations and fiscal audits o SEA and LEA reporting requirements

Financial Management Requirements

11

Section 80 of EDGAR Specific regulations governing three threshold systems:

 Financial Management  Procurement  Inventory

General Principles

12  In general, the SEA and the LEA must implement controls over federal funds.

 ED looks to “systems,” not individuals, to ensure funds are spent appropriately.

Financial Management

13  Definition-controlling and accounting for federal funds and assets  Used to make informed programmatic decisions  Used to substantiate and document expenditures  Seven standards described in Section 80.20(b)of EDGAR

Financial Management

Seven Requirements:

 Financial Reporting  Accounting Records  Internal Control  Budget Control  Allowable Cost  Source Documentation  Cash Management 14

Budget Controls

15  Pre-award planning process and technical assistance developing and approving budgets  Communication between fiscal and program staff at the SEA and LEA levels  Routine reconciliation to actual expenditures at the SEA and LEA levels

Allowable Cost Controls

16   Program Regulations Formal procedures or statue relating to costs Guidelines for determining allowable costs  (OMB Circular A-87, EDGAR) Access to helpful resources and program guidance

Financial Management

17  

Obligation

Obligation-transaction that requires payment Valid obligation–transaction giving rise to an obligation within the period of grant availability

Financial Management

18

Obligation=transaction that requires payment

Acquisition of property Date of binding or written commitment – PO or contract Personal services by employee Personal services by contractor Travel After services are performed Date of binding written commitment After travel is taken

Financial Management 19  In some programs, unobligated funds can be “carried over” from first year Tydings Amendment  Does not apply to all grants  Allows extra year to obligate funds  Under Tydings, funds are available for 24-27 months  15 months under the grant award  Plus 12 months • Restricted to a 15% carryover for Title I Part A and Title II

Financial Management

20

Liquidation

   Liquidation–settle an obligation by paying funds All obligations must be liquidated within 90 days after the end of the obligation period.

SEA may impose a shorter deadline on sub grantee.

Procurement Procedures

21  General procurement procedures are found in EDGAR and some are found in the individual federal program statute  Follow State’s procurement procedures  State Board Policy 8200  Purchasing Policies and Procedures Manual

Procurement Procedures

   22 Consider purchases based on the following considerations:  Allowable by the specific program     Reasonable Necessary for the administration and/or implementation of the grant Be authorized or not prohibited under state or local laws or regulations Be adequately documented (requisition, PO, invoice and proof of payment) 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 Conduct all transactions with full and open competition – be cognizant of conflict of interest

Procurement Procedures

23      

Contracted Services

Contract should include clearly defined deliverables and terms     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) Remedies for breach of contract-sanctions and penalties Termination procedures Compliance with federal statues – see §80.36(i)(3-6) of EDGAR Reporting procedures (if applicable) Requirements pertaining to copyrights

Procurement Procedures

24

Contracted Services

 Must have written invoice from the individual or company contracted     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/expenditures Documented approvals

Inventory Management

25 Inventory items purchased with federal funds are divided into three categories:    Real Property (if an allowable program cost) Equipment Supplies

Inventory Management

26

Equipment Inventory vs. Internal Control

 EDGAR requires an inventory for equipment  Inventory not required for supplies; funds

however,

ED determined that an adequate internal control

system must include a process for labeling

and locating property purchased with federal

Inventory Management

   27 Equipment  Federal Definition of Equipment    Tangible 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  Small cost items  Consumed quickly ED expects subgrantees to track all property purchased with federal funds, in order to prove there has been a benefit to the federal program

Inventory Management

28 Practical help for tracking non-equipment items  Small and attractive item list    Conduct risk assessment to identify items susceptible to loss Implement specific measures to control such items Certain pre-defined assets (technology equipment)

Inventory Management

29  Equipment inventory-updated annually  a description of the property  a serial number or other identification number  the acquisition date and cost of the property  the percentage of federal participation in the cost of the property  the location, use and condition of the property, and  any ultimate disposition data including the date of disposal and sale price of the property  Physical inventory  Must be performed at least every 2 years  Indicate signature of individual(s)

Inventory Management

30  Must protect against unauthorized use   When property is no longer needed, must follow disposition rules: Transfer to another federal program   Over $5,000 – Keep or sell, but must pay a share based on the percentage of federal ED participation at initial acquisition Under $5,000 – May keep, sell, or dispose of it with no obligation to ED

Inventory Management

31  Must have adequate controls in place to account for:  Location of equipment - assure that it is used solely for authorized purposes   Custody of equipment - maintain effective control and accountability Security of equipment - adequately safeguard all property

Closing Thoughts…...

32

E F F I C I E N C Y I S D O I N G T H E T H I N G R I G H T . E F F E C T I V E N E S S I S D O I N G T H E R I G H T T H I N G .

–

P E T E R F . D R U C K E R