CASH MANAGEMENT NYSFAAA Date Nautochia Webb U.S. Department of Education Training & Information Services Division

2 Financial Responsibility Standards All schools must meet general standards and past performance standards

3 Financial Responsibility General Standards Public Institutions Considered financially responsible if: –School provides ED with a letter from an official of the appropriate state entity that has legal authority to make such designations, confirming that it is a public institution and –School is not in violation of any past performance requirement under

4 Financial Responsibility General Standards Proprietary or Private Nonprofit Institutions Composite score of at least 1.5 Sufficient cash reserves to make required returns of Title IV funds School is current in its debt payments, and School is meeting all of its financial obligations Audited financial statements do NOT express doubt about continued existence of school (e.g., “going concern” or an adverse, qualified or disclaimed opinion)

5 Composite Score Calculation (example: Proprietary Institution)

6 Composite Score Scale Score Passed Financial Responsibility Standards - No Requirements With Conditions – Cash Monitoring or Reimbursement Based on School Participation Division Risk Assessment OPTIONS: (1) CM Level 1 (2) CM Level 2 (3) Reimbursement and/or other reporting as required by School Participation Division.9 Failed Financial Responsibility Standards OPTIONS: (1) Post a Minimum 50% Letter of Credit (LOC) (2) Provisional Certification - minimum 10% LOC and cash monitoring level 1 or 2, or reimbursement

7 Refund Cash Reserve Standards School is considered to have sufficient cash reserves if it meets one of the following: –Satisfies the requirements of a public school –Is located in a state that has a tuition recovery fund approved by the Department and the school contributes to the fund, or –Demonstrates that it makes its Returns to Title IV Funds in a timely manner

Timely Refund Standard School demonstrates it makes refunds timely if fewer than 5% of required refunds sampled in audit or program review were late

9 Timely Return of Title IV Funds School must perform calculation within 30 calendar days of date that school determines student is a withdrawal School must return funds to Department within 45 calendar days of date that school determines student is a withdrawal –Return of funds is distributed to Title IV programs per order specified in the law

10 Return of Title IV Funds Statutory formula that determines amount of Title IV aid a student has earned during his/her period attendance Applies to any Title IV student who begins attendance and then completely withdraws, or otherwise ceases attendance

11 Return of Title IV Funds Student earns Title IV through attendance –Percentage of aid earned is equal to percentage of payment period or period of enrollment completed Percentage of completion is calculated using –calendar days in credit hour programs –scheduled clock hours in clock hour programs

12 Return of Title IV Funds School is responsible to return Title IV funds disbursed, but not earned by student

13 Financial Responsibility and Current in Debt Payments A school is not current in its debt payments if –It is in violation of any existing loan agreement at its fiscal year end, or –Fails to make a payment in accordance with existing debt obligations for more than 120 days and at least one creditor has filed suit to recover funds under those obligations

14 Past Performance Standards: All Schools A school is not financially responsible if –A person who exercises substantial control over the school owes a liability for a Title IV violation, unless the liability is being repaid in accordance with agreement with the Department –In the last five years, the school has been subject to a limitation, suspension or termination action or has entered into an agreement to resolve a limitation, suspension or termination action initiated by the Department or guaranty agency

15 Past Performance Standards: All Schools A school is not financially responsible if the school –Has had an audit finding in either of its two most recent compliance audits or a program review finding for its current or preceding two fiscal years, that required repayment of more than 5% of Title IV funds for the years covered by the review or audit –Has been cited during the last five years for failing to submit audits as required –Has failed to resolve any compliance issues identified in program reviews or audits

16 Proprietary Schools and the 90/10 Rule May derive no more than 90% of its revenues from the Title IV federal student aid programs 10% of revenue must come from non-Title IV funding –Tuition, fees, other institutional charges, school activities necessary for students enrolled in those programs

17 Proprietary Schools and the 90/10 Rule Must calculate using the cash basis of accounting Must report as a footnote in annual financial statements See 34 CFR (b)(16) and 34 CFR

18 The 90/10 Formula Applicable only to Proprietary Schools FSA program funds (except LEAP or FWS) used for tuition, fees and other institutional charges to students The sum of revenues generated by the school from: (1) tuition, fees and other institutional charges for student enrolled in eligible training programs, plus (2) school activities* necessary for the education or training of students enrolled in those eligible programs *to the extent not included in tuition, fees and other institutional charges ÷

19 Campus Based Programs Information and Additional Fiscal Information

20 Campus-Based Administrative Cost Allowance (ACA) Use to defray costs of administering the program School must request and draw down ACA is based on Campus-Based expenditures (federal plus nonfederal) for the award year –FSEOG funds disbursed to students –FWS gross wages paid to students –Perkins Loans advanced to students

21 Campus-Based Requirements Application process –Mark programs on PPA (new school) –Complete FISAP by October 1, 2012 Application for Report for Matching requirements Other uses of funds Get Ready – Fiscal Obligations

22 Campus Based Matching Requirements General rule –Federal share may not exceed 75% of FSEOG, FWS or Perkins expenditures Automatic waivers of FSEOG and FWS matches for Titles III and V institutions Specific FWS federal match waivers Get Ready – Fiscal Obligations

23 FSEOG Match Nonfederal match –Institutional grants and scholarships –Tuition or fee waivers –State scholarships –Foundation or other charitable organization funds –Various methods for matching Federal allocation may not exceed 75% of total awards made

24 FWS Match Nonfederal match may be noncash Private nonprofit organization or federal, state, or local public agency employer –Up to 90% federal for up to 10% of students Private for-profit employer –Minimum 50% nonfederal match

25 FWS Automatic Match Waivers If work performed by student is for the institution, a public agency or a private nonprofit organization, AND Student is a reading tutor, math tutor and/or performing family literacy activities, THEN Funds used to pay students may be 100% federal funds Get Ready – Fiscal Obligations

26 FWS Community Service Requirements School must use 7% of total allocation for community service employment Must include one reading tutor project or family literacy project Get Ready – Fiscal Obligations

27 Pell Administrative Cost Allowance Use to defray costs of administering the program Funds automatically sent by EFT to institution periodically during award year $5 per unduplicated Pell recipient per award year –ED/FSA must have accepted origination and disbursement record in COD

Common Origination & Disbursement Record the amounts for Federal Pell Grants and Direct Loans as reported in COD The COD website provides a number of reconciliation tools, including several reports: − Pell Electronic Statement of Account (ESOA) − Pell Year To-Date (YTD) − Direct Loan Funded Disbursement List − Direct Loan School Account Statement (SAS)

G5 Record the amounts as reported in G5 G5 replaced Grant Administration and Payment System (GAPS), including the e-Payments functionality used by schools to draw down Campus-Based, Federal Pell Grant (Pell Grant), and William D. Ford Federal Direct Loan (Direct Loan) funds

Financial Aid Office Responsibilities Develop written policies and procedures Adhere to principles of separation of duties Keep current on changes in laws and regulations Advise and counsel students/parents about financial aid Determine students’ eligibility for financial aid Make financial aid awards to students

Financial Aid Office Responsibilities Determine the amounts disbursed each month from each program (according to Financial Aid Office records).

Business Office Responsibilities Maintain records consistent with G5 Project cash needed to cover disbursements Obtain authorization to pay Title IV funds Reconcile accounts Assist in completing applications and FISAP

Business Office Responsibilities Be aware of changes in Title IV regulations Make required refunds of Title IV funds Determine the amounts disbursed each month from each program (according to Business Office records, ledger, etc.).

Separation of Duties Reduces the risk of errors or inappropriate actions Serves as a check on the work of each area involved in the processing and delivery of Title IV funds

Checks and Balances The Financial Aid person who awards Title IV funds may not: sign checks or deliver them to students; deliver cash to student; or credit student accounts with Title IV funds to cover allowable costs. The Business Office person who reconciles federal cash should not also receive federal cash or disburse it.

Automated Systems Enhances accuracy and efficiency, but can blur the separation of duties Schools must keep awarding and disbursement separate Information entered and controlled by one office cannot be changed by another office

Cash Management Cash Needs, Disbursement Rules and Reporting- Immediate Need: Amount of Title IV program funds a school needs to make disbursements within three business days following the date the school receives the funds: Anticipated disbursements total minus Balance of cash on hand (Title IV) minus Anticipated recoveries minus ACH/EFT cash in transit equals projected immediate need

Disbursement Defined as the date a school credits a student’s account at the school or pays a student or parent directly with – Funds received from the Department School funds used in advance of receiving funds from the Department Disbursement date reported to COD must be the actual date of disbursement to the student’s account 38

Late Disbursements Consider if ED processed SAR/ISIR with EFC before student became ineligible Ineligible students: - DL: enrolled less than half-time - Pell, FSEOG, and Perkins: no longer enrolled

Managing Federal Funds Schools must not request funds that exceed their immediate need for those funds Funds received from G5 must be disbursed to students within three business days of receipt Excess Cash Any amount of Title IV funds not disbursed to students by the end of the third business day after receipt 40

Funding Basics Funding is specific for each program and for each award year Funding is not student specific Timelines and deadlines for reporting disbursements to COD Actual disbursements may be reported up to 7 days prior to disbursement date and must be reported no later than 15 days after the disbursement date (30 days for disbursements prior to April 1, 2013) 41

Reporting Disbursements: G5 Cash is made available in school’s G5 account through initial authorization and subsequent increases G5 records continually update, reflecting − changes to authorization − cash draws by the schoo l School cannot draw G5 cash that exceeds authorization COD makes necessary cash adjustments to authorization

Pell Current Funding Level (CFL) Pell Grant funding is records first Schools submit actual disbursement records to COD COD sends data for accepted actual disbursements G5 to create or increase authorization G5 makes funds available in the amount of accepted disbursements 43

Direct Loan Current Funding Level New schools: Loan support team works with school to determine appropriate initial funding level Continuing schools: Award year initial authorization based on prior year disbursement history Increases for all schools based on actual disbursement records accepted by COD 44

School makes or schedules actual disbursements to student accounts School reports actual disbursements to COD COD accepts actual disbursement records and raises Current Funding Level (CFL) to amount of accepted actual disbursements COD sends CFL amount to G5. G5 raises Authorization to match CFL School requests funds from G5 for transfer to school’s bank G5 transfers funds to school’s federal funds account School transfers funds from federal funds account to operating account School funds actual disbursements to student accounts Funding Process

Prior-Year Recoveries Previously disbursed funds that are subsequently recovered by institution Funds must be returned to the proper award number via G5

Prior-Year Charges Allowed for prior award year charges for a total of $200 or less: − Obtain voluntary student authorization − Determine that payment will not prevent student from paying current educational expenses – institutional and non-institutional − Prior semester charges within same award year are not considered prior-year balances

Unprocessed Deobligations Occurs routinely when FA administrators submit decreases to disbursement records and the Business Office has not submitted cash refunds to G5 Resolution can be accomplished by − refunding amount of unprocessed deobligation; − submitting disbursement records that cover amount of unprocessed deobligation; or − making an electronic adjustment in G5.

System-Generated Adjustments Pell Grant authorization adjustments may be system- generated, as result of negative pending amount or potential overaward project (POP) If a school does not make an adjustment within 30 days, COD: − reduces the disbursement with the highest disbursement − reduces all disbursements

Reconciliation Institutions must reconcile internal accounting records against: G5 Pell Year To Date (YTD) DL School Account Statement (SAS) COD FISAP Federal program’s bank statements

Reconciliation Match school records with the Department’s records: Fulfills a responsibility to safeguard federal funds Ensures funds are used as intended Contributes to the integrity of Title IV programs

Monthly Reconciliation Monthly reconciliation is required for Campus-Based and DL programs Monthly reconciliation is recommended for all other Title IV aid programs Outstanding discrepancies must be resolved

Pell and Direct Loan Reconciliation 1. Match the records of awards and disbursements maintained by the Financial Aid Office and Business Office. 2. Match disbursements posted by the Business Office to those records on the COD system. 3. Match cumulative school, COD records, and net draws in G5 for the Pell Grant and DL programs for the award year.

COD Reports Schools may reconcile Net Accepted and Posted Disbursements in the COD system using these tools: Reconciliation File or Report Year-to-Date (YTD) Record COD Pending Disbursement List COD Electronic Statement of Account (ESOA) School receives School Account Statement (SAS) for Direct Loans

Summary of Reconciliation Activities Identify, monitor, and resolve monthly differences and discrepancies caused by rejected records Document monthly reconciliation efforts and unfinished processing issues Justify programs’ monthly ending cash balances Use all available internal and external reports

Reconciliation So What’s the Problem??

Reconciliation Issues Business Office failed to tell FA Office about a R2T4 calculation FA Office cancelled a Pell Grant when student did not attend classes and Business Office was not informed Potential Overaward Project (POP) FA Office failed to tell Business Office about reduction of a Pell Grant

58 Campus Based Programs Information and Additional Fiscal Information

Transfer of Funds Funds may be transferred between certain Campus- Based programs FWS/FSEOG funds may be carried back to previous award year or forward to next year Report all transfers on the FISAP If a school transfers FWS funds to the FSEOG Program, any unexpended funds must be transferred back to the FWS Program at the end of the award year.

Transfer of Funds FSEOG funds may not be transferred to another Campus Based program Up to 25% of the school’s FWS allocation and 25% of Federal Perkins FCC may be transferred to FSEOG − 25% maximum based on school’s current award year allocation − Includes the initial and supplemental FWS allocation

Transfer of Funds Federal Supplemental Educational Opportunity Grant (FSEOG) Note that funds may not be transferred from the FSEOG Program, or to the Perkins Loan Program. Transferring Funds Between Campus- Based Programs

Carry Forward Provisions School may disburse up to 10% of current year FWS and FSEOG allocation in following award years Funds carried forward must be expended before disbursing funds from the current award year allocation

Reporting Carry Forward/Back Report FWS and FSEOG funds carried forward and back Example: If a school carried forward 10% of its FWS allocation to be spent in 13-14, the school must report the amount on the FISAP that was due no later than 10/01/13 in Part V of the Fiscal Operations Report for

Campus-Based Program Closeout Reconcile school's authorized award with amount reported as expended on school's FISAP Amount appears in G5 as expended amount for award year ED determines the closeout amounts based on actual net disbursements reported by a school

Issues in Campus-Based Programs Management and Accounting Allocation Release and Reallocation Institutional Match Administrative Cost Allowance (ACA) Transferring Funds

Issues in Campus-Based Programs Management and Accounting Carry Forward/Back Accounting Issues G5 Closeout Record Keeping Program Integrity

Campus-Based Allocation ED allocates funds directly to schools yearly for each program Amount is based on FISAP submitted prior year Unused funds are deobligated − If greater than 10% returned, allocation will be reduced the next year

Administrative Cost Allowance (ACA) ACA is calculated on the full amount of the Campus- Based awards Calculation for Perkins, FWS and FSEOG − 5% of the first $2.75M under CB programs − 4% greater than $2.75M, but less than $5.5M − 3% greater than $5.5M

Determining Closeout Amounts

Negative G5 Balance Negative amount will appear in G5 available balance line, if school's fiscal office drew down more money than reported as expended on FISAP Business Office must refund the amount or perform a drawdown adjustment School amends FISAP to show proper amount expended equal to amount drawn

Closeout Notification ED notifies school by if decrease was applied to Campus-Based awards through close out process School may correct FISAP through eCB website, if prior year report was incorrect and needs adjustment − Contact the Campus-Based Call Center after correction

Acceptable Record Formats Hardcopy Microform Computer file Optical disk CD-ROM Other media formats

Wrap Up: Objectives Explain the role of Fiscal Officers in Title IV program administration Outline institutional fiscal responsibilities Identify internal control functions of eligible and participating institutions Discuss resolution of conflicting information

74 School Responsibilities For Program Integrity Eligibility for and administration of Title IV aid is an institutional responsibility Must involve all major offices, not just financial aid (academics, admissions, business, placement, registrar, student affairs, etc)

75 School Responsibilities For Program Integrity Standard of Conduct - Fiduciary Duty: Schools participating in the Title IV programs act as a fiduciary of Title IV funds –Schools must act with the competency and integrity to qualify as a fiduciary –A fiduciary is subject to the highest standards of care and diligence in administering the programs and in accounting for the funds received Also applies to third-party servicer Failure to act as a fiduciary can lead to termination from participation, or other administrative action

76 School Responsibilities For Program Integrity Use of Funds: A participating institution is a trustee of federal funds –Schools may not use Title IV funds for any other than their intended purposes –Schools may not hypothecate (i.e. use as collateral) Title IV funds for any purpose

77 Account Records and Program Integrity Institutions must maintain, on a current basis, financial records that reflect all Title IV program transactions General ledger control accounts and related subsidiary accounts must identify all program transactions and separate those transactions from other financial activity Pell and Direct Loan accounting records must be reconciled monthly

78 Recordkeeping and Program Integrity Institutions shall maintain required records in a systematically organized manner Records may be retained in hard copy or in electronic media formats as long as – –Records can be retrievable in hard copy format –The ISIR must be retained in the format in which it was received Most records must be retained for 3 years after the end of the year in which they were created –Some records have longer retention requirements

79 How Your School Contributes to Program Integrity Establish strong controls Establish written policies and procedures and implement them –“A Guide to Creating Policies and Procedures” on FSA Assessments – s/makingofapandpmanual.htmlhttp:// s/makingofapandpmanual.html Click Here!!

80 How Your School Contributes to Program Integrity Maintain well-trained staff –All ED/FSA training is offered free of charge! – Provide required equipment and electronic access –see Get Ready to Participate Electronically –Automation section of FSA Assessments, Click Here!!

81 How Your School Contributes to Program Integrity Ensure that issues identified in audits and reviews get corrected –Ask for technical assistance from your School Participation Division Conduct institutional self-assessments –FSA Assessments’ Management Enhancement Worksheets, Click Here!!

QUESTIONS?

CONTACT INFORMATION: Nautochia Webb Customer Service: FSA is committed to providing the best possible customer service. Help us, help you! Please provide any feedback on this training at: Feedback on Training can also be shared with: Annmarie Weisman, Eastern Region Supervisor CONTACT INFORMATION: Nautochia Webb Customer Service: FSA is committed to providing the best possible customer service. Help us, help you! Please provide any feedback on this training at: Feedback on Training can also be shared with: Annmarie Weisman, Eastern Region Supervisor