BE A FI$CAL $.T.A.R. Allowable Costs

Management/Oversight Presenters: Ron Petracca, Senior Counsel, Office of General Counsel (OGC) Sean Barrett, Financial Management Analyst, SMPID Fiscal Unit Conferences, Meetings and Travel Expenditures

AGENDA  Background and legal basis  Strategies for implementation  Examples  Conclusion

 Audit of expenses at DOJ law conferences (September, 2011)  OMB Memo on “Eliminating Excess Conference Spending and Promoting Efficiency in Government” (September, 2011)  Audit of GSA conference (April, 2012)  OMB Memo on “Promoting Efficient Spending to Support Agency Operations” (May, 2012)  Congressional Oversight Requests  Deputy Secretary’s memo (June, 2011 ) BACKGROUND AND LEGAL BASIS

General/Common Principles  Answer/ask the question: Is a meeting/conference or travel the best way to meet your objectives?  “Optics” – How would Joe Public react?  Having previously provided food/water does not affect future allowability.  The name or type of group does not mandate allowability of costs.  Department Guidance Use the “reasonable and necessary” standard – Is this necessary? Can I prove this? Are there alternative, more cost-effective ways to accomplish your objectives without sacrificing quality (e.g., location, webinars, video conferencing)?

Meeting/Conferences Expenses Overview  The use of appropriated funds for travel, transportation and/or subsistence expenses are allowable only in limited circumstances.  An appropriate justification must be available anytime the use of appropriated funds is provided for travel, transportation or subsistence expenses.  Justifying the allowability of these expenses is the responsibility of the grantee.

Food at ED-Sponsored Meetings/Conferences  As a general rule, with limited exceptions, appropriated funds may not be used for personal expenses (i.e., food). “Food” includes, but is not limited to, coffee, snacks, light refreshments, hors d'oeuvres, breakfast, lunch, dinner, etc.  In developing the agenda for a meeting/ conference, every effort should be made to set the agenda in a manner that allows attendees sufficient time to procure snacks and meals at their own expense.

State Per Diem and Expenses to the Federal Award  Know your state per diem rules, the details and when they apply - these will apply to whether an expense is allowable with federal funds.  If per diem will cover a good or service, the grantee should not be providing the same good or service to participants. If the good or service is provided, per diem reimbursement should be reduced.  In the above example the grantee should not pay for food or travel expense with the assumption that a participant will be refunding the money to the agency at a later time.

Source of Funds for Food If a determination is made that it is reasonable and necessary to use appropriated funds for food (i.e., working lunch):  Program funds may be used if there is specific statutory language indicating that such appropriations “shall be available for the expenses of attendance at meetings.”  Salaries and Expenses (S & E) may be used if a determination has been made that the food serves the purpose of the meeting/conference and is a legitimate conference expense (i.e., criteria set forth in Four-Part Test) and the other criteria stated in Section 505 apply.

Four-Part Test  Formal meeting/conference (i.e., topical matters of interest to, and participation of, multiple agencies and/or nongovernmental participants; registration; published and substantive agenda; scheduled speakers; discussion panels, etc.);  Meals and refreshments are incidental to the overall purpose of the formal conference;  Attendance at the meal and/or when refreshments are served is necessary to ensure attendee’s full participation in essential discussions, lectures, or speeches concerning the purpose of the meeting/conference;  Meeting/conference includes substantial functions that occur separately from when meals and refreshments are served. If specific statutory authority exists to use appropriated funds for expenses of attendance at meetings, food may be considered as a reasonable and necessary expense, if it meets the following criteria (Four-part test):

 Communicate requirements to groups early and often, especially if food/drink were previously provided.  Is there a way to structure the location or agenda to make acquiring food and drink easier?  Are there more cost-effective or efficient alternatives (i.e., different location, webinars, video conferencing) to provide the information?  Is the meeting and/or food consistent with the grantee’s funding agreement (contract, grant, etc.)?”  What are the state per diem rules? STRATEGIES FOR IMPLEMENTATION

How would the participant acquire food/drink if the activity were not occurring? Follow statutory and regulatory requirements in determining whether costs are reasonable and necessary EDGAR Cost principles When asked, could the grantee provide documentation necessary to justify the expenditure- including exploration of alternatives? Strategies for Implementation (cont.)

Attendees and Working Lunches A working lunch is an example of a cost for food that might be allowable under a federal grant if attendance at the lunch is needed to ensure the full participation by attendees in essential discussions and speeches concerning the purpose of the meeting/conference and achieving the goals and objectives of the project.

Do not assume that allowability in one state automatically means allowability in another. State laws and regulations often differ; unknown details also may differ and result in a different interpretation. In making decisions in your agency about the appropriateness of providing food, be sure you have employed all the relevant tests – reasonableness, necessity for full participation, achieving the goals and objectives of the project.

Items that are Never Allowable Federal grant funds may not be used, and run the significant risk of being disallowed if they were used, to pay for:  Alcoholic beverages;  Entertainment, including the costs of amusement, diversion, and social activities;  Expenses that are already covered by per diem; or  The grantee cannot document how the expense is necessary and reasonable.

EXAMPLES

Example Situation Our SRC routinely meets in settings where participants can easily access food/water during planned breaks. As part of our outreach plan we are looking to have our next meeting in a very rural part of the state where it might not be possible to find a meeting location with good access to outside food/water. In this instance can we provide food/water with federal funds?  What are the relevant facts?  Is this allowable? If yes, why?  If no, why not and what could be done differently to make it allowable?

Working the Example Relevant Facts:  The SRC is a legally mandated group.  Community meetings are a reasonable activity pursued in exercising legally mandated duties.  Occasionally having meetings in rural areas is reasonable.  Ruralness of the location may make it unreasonable to access food/water in a timely manner.  The SRC is actively seeking out food/water options and providing justification for using federal funds to purchase these items.

Is this Allowable? The purchase of food/water with federal funds would be allowable in this situation, if in fact the barriers associated with the rural location proved to be unavoidable (at this time they are potential, not actual barriers).

Example Situation Our commission holds community forums to garner input which we use when creating State Plans. These typically occur over dinner, and we are afraid that without providing dinner, the community won’t attend, which will diminish our ability to write an effective plan. To avoid this we provide full buffet style dinners to all who attend.  What are the relevant facts?  Is this allowable? If yes, why?  If no, why not and what could be done differently to make it allowable?

Working the Example Relevant Facts:  This appears to be a legally constituted group pursuing a mandated function.  Having some- not all – community meetings at night is reasonable.  This appears to be the evening equivalent of a working lunch.

Is this Allowable? No. Although all the aspects listed above would indicate this as an allowable activity, the “full buffet style dinner” appears to be an unreasonable method to complete the activity. Dramatically scaling back the food could make this activity allowable

Example Situation Our SILC provides coffee in the morning and cookies in the afternoon. We have done so for 15 years and our members have come to expect this. Can we continue?  What are the relevant facts?  Is this allowable? If yes, why?  If no, why not and what could be done differently to make it allowable?

Working the Example Relevant Facts:  This appears to be a legally constituted group pursuing a mandated function.  Coffee and cookies have been provided for 15 years and members have come to expect this.

Is this Allowable? No. No facts were presented to indicate that providing these amenities for member is necessary to achieve the mandate functions. Furthermore, these amenities may be covered in per diem costs, which are already paid to the member. We recommend assuring agendas or other plans are structured to allow members time to acquire food/drinks on their own.

Example Situation Our annual VR staff meeting typically awards a trip to Hawaii to high performers. We strongly believe this benefits morale and rewards high performers.  What are the relevant facts?  Is this allowable? If yes, why?  If no, why not and what could be done differently to make it allowable?

Working the Example Relevant Facts:  VR staff meetings are directly related to mandated duties.  Awards can be provided to improve

Is this Allowable? No. A trip to Hawaii would be an unreasonably expensive method to achieve the goal of improving morale.

Don’t hesitate to ask questions or raise concerns/issues. Grantees are expected to take proactive steps to justify allowability of expenses. RSA staff is available to provide support and advice. Recipients of federal funds are responsible for proactively justifying expenses. We all must be responsible stewards of taxpayer dollars. CONCLUSION

For More Information: MEMORANDUM TO ED GRANTEES REGARDING THE USE OF GRANT FUNDS FOR CONFERENCES AND MEETINGS

QUESTIONS? QUESTIONS