FEDERAL GRANT MANAGEMENT Federal Programs New Directors Workshop March 11, 2013 WVDE Office of Federal Programs

Legal Structures for Federal Programs 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 2

Grants Management Resources Program Guidance: – Statutes – Regulations – Guidance General Education Provisions Act (GEPA): html Education Department General Administrative Regulations (EDGAR): 3

Grants Management Resources Office of Management & Budget (OMB) Circulars: – Circular A-87 principles for allowable costs – Circular A-122-cost principles for non-profit organizations – Circular A-133 Compliance Supplement-audit 4

What Rules Apply to Utilizing Federal Funds? 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 – State Administered Programs – Section 80 of EDGAR – Uniform Admin. Requirements…State & Local Gov. 5

Who or What is EDGAR? Education Department General Administrative Regulations (EDGAR) 6

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

Financial Management Requirements EDGAR Section 76 o Eligibility to receive subgrants o Distribution of funds (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 8

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 process o 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 9

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 audits o SEA and LEA reporting requirements 10

Financial Management Requirements Section 80 of EDGAR Specific regulations governing three threshold systems: Financial Management Procurement Inventory 11

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. 12

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 13

Financial Management Seven Requirements: – Financial Reporting – Accounting Records – Internal Control – Budget Control – Allowable Cost – Source Documentation – Cash Management 14

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 15

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 16

Financial Management Obligation Obligation-transaction that requires payment Valid obligation–transaction giving rise to an obligation within the period of grant availability 17

Financial Management Acquisition of propertyDate 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 TravelAfter travel is taken 18 Obligation=transaction that requires payment

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 months – 15 months under the grant award – Plus 12 months Restricted to a 15% carryover for Title I Part A and Title II 19

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. 20

Procurement Procedures General procurement procedures are found in EDGAR and some are found in the individual federal program statute Follow States procurement procedures – State Board Policy 8200 – Purchasing Policies and Procedures Manual 21

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 – 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 22

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 23

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 24

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

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 26

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 27

Inventory Management 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) 28

Inventory Management 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) 29

Inventory Management 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 30

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 31

Closing Thoughts…... Efficiency is doing the thing right. Effectiveness is doing the right thing. – Peter F. Drucker 32