FEDERAL PROGRAMS WORKSHOP

JULY 21, 2010

JAN STANLEY, STATE TITLE I DIRECTOR

Federal Grant Federal Grant Management Management

Legal Structures for Federal Legal Structures for Federal ProgramsPrograms

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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 CircularsGuidance

Non-Regulatory Guidance

Federal Grants Management Federal Grants Management ResourcesResources

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Program Guidance: www.ed.gov Statutes Regulations Guidance

General Education Provisions Act (GEPA):

http://www.law.cornell.edu/uscode/20/usc_sup_01_20_10_31.html

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

Federal Grants Management Federal Grants Management ResourcesResources

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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 What Rules Apply to Utilizing Federal Funds?Funds?

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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 EDGARSection 80 of EDGAR

Who or What is EDGAR?

Education Department

General Administrative Regulations (EDGAR)

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Financial Management Requirements

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

Financial Management Requirements

EDGAR Section 76o Eligibility to receive subgrantso Distribution of funds by formula or

competitive o Private faith-based organizations eligible to

receive fundso State consolidated grant application to EDo Assurance statementso Ability for the SEA to reallocate funds based

on specific federal program

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Financial Management Requirements

EDGAR Section 76 (continued)o LEA grant application and budget approved by the

SEA prior to the issuance of a grant and the expenditure of funds

o Approval processo 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)

o Consultation with and services for private school students

o Application guidelines for private schools

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Financial Management Requirements

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 auditso SEA and LEA reporting requirements

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Financial Management Requirements

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Section 80 of EDGAR

Specific regulations governing three threshold systems:

Financial Management

Procurement

Inventory

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General Principles

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

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

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Financial Management

Seven Requirements: Financial Reporting Accounting Records Internal Control Budget Control Allowable Cost Source Documentation Cash Management

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Budget Controls

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

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Allowable Cost Controls

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

ObligationObligation-transaction that requires paymentValid obligation–transaction giving rise to an

obligation within the period of grant availability

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Financial Management

Acquisition of property Date of binding or written commitment – PO or contract

Personal services by employee

After services are performed

Personal services by contractor

Date of binding written commitment

Travel After travel is taken

Obligation=transaction that requires payment18

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Financial Management

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

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.

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Procurement Procedures

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

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Procurement Procedures

Consider purchases based on the following considerations: Allowable by the specific program Reasonable Necessary for the administration and/or implementation of the grant

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

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Procurement Procedures

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

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Procurement Procedures

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

Inventory items purchased with federal funds are divided into three categories:

Real Property (if an allowable program cost)EquipmentSupplies

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Inventory Management

Equipment Inventory vs. Internal Control

EDGAR requires an inventory for equipment

Inventory not required for supplies; however, ED determined that an adequate internal control system must include a process for labeling and locating property purchased with federal funds

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Inventory Management

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 Management28

Practical help 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 Management29

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 Management30

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

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Inventory Management

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

EFFICIENCY IS DOING THE THING RIGHT. EFFECTIVENESS IS DOING THE RIGHT THING.

– PETER F. DRUCKER

Closing Thoughts…...32