1. 1 On-Line Financial Management Workshops Equipment, Facilities, Capital Improvements & SWA Real Property June 2009

2. 2 Financial Management Workshop Equipment, Facilities, Capital Improvements & SWA Real Property

3. 3 Financial Management Workshop Equipment Equipment

4. 4 Equipment – Federal Definition  Unit acquisition cost of $5000 or more  Useful life of 1 year or more  Prior approval requirements  Title remains with grantee  Grantee can define equipment at a lower $ threshold

5. 5 Prior Approval of Equipment Purchases  Formula grants: States have been delegated approval authority for equipment  Discretionary grants: approval rests with the ETA Grant Officer

6. 6 Allowable Equipment Costs  Direct cost to grant if prior approval is obtained  Purchased by the grantee –Users charged a share of depreciation, or –Use allowance fee charged to all users Federal cost recovery limited to 6 2/3 percent of total acquisition cost annually

7. 7 Management, Use & Disposition  States follow State laws and procedures  All others follow federally specified requirements

8. 8 Equipment Management  Required of all grantees  Biennial physical inventory must be done  Maintenance procedures  Loss prevention & control system  Disposition process  Tagging

9. 9 Does your organization have …?  Policy guidelines for retrieving equipment  Sufficient safeguards in high traffic areas  Procedures to track down misplaced items  A system which can identify the location of items at any given moment

10. 10 Equipment Records must contain the following:  1. Unit acquisition cost  2. Acquisition date  3. Description  4. Serial Identifying number(s)  5. Funding source  6. Percentage of Federal interest  7. Title of ownership  8-9. Current use & location  10-11. Date and condition at last physical inventory  12. Disposition data

11. 11 Period of Use for Equipment  Project/Activity period Even after Federal grant funding ceases If needed less than full time –Non-interfering use for other Federal programs allowed –reasonable use fee = program income As long as project/activity continues, then  Other Federally funded activities Until no longer needed for Federal programs

12. 12 Order of precedence? For post-project use  Other Federal grant program From awarding agency [ETA] »Nature of program need not be same/similar From same Federal agency [DOL] From other Federal agency

13. 13 Equipment Disposition  Equipment items with FMV = $5,000 –May retain for other uses Must reimburse Federal agency »Current fair market value –If no other use for item Request Disposition Instructions

14. 14 Equipment Disposition Request  Purpose is to allow awarding agency To determine if it has another use for items If so, instructions will be where to ship  Most often will not get response »Many recipients fail to ask –If no response in 120 days –Only three options »Sell, Keep or Donate [give away] –Must reimburse Federal agency »Current fair market value »Sales proceeds less costs of selling

15. 15 Other Property Issues Disposition of Supplies  No disposition request required for supplies Award recipient responsibility  May retain or sell residual inventory  When residual inventory = $5,000 FMV Aggregate fair market value of all remaining supplies laptops + paper + pencils + staples + desks + chairs Return sales proceeds or fmv to funding agency

16. 16Facilities Facilities

17. 17 Allowable Premises Cost  Costs of Ownership –Depreciation or Use Allowance –Plus annualized 3 rd party Interest  Capital leases –Lease with option to buy –Same as costs of owned building  Operational leases –Commercial rate

18. 18 Reasonable Rent  Reasonable rental cost for buildings  Sale or leaseback arrangements  Less-than-arms length

19. 19 WIA Prohibition  Construction or purchase of facilities –(20 CFR Part 667.260)  Exceptions: Physical and programmatic accessibility and reasonable accommodation (rehab act and ADA) Repairs, renovations, alterations and capital improvements of property including: –SESA –JTPA transferred property –Job corps facilities and –Disaster relief

20. 20 Capital Improvement Projects Examples  Materially increases the value or useful life of the facility –Replacing a roof –Paving sidewalks –Adding a floor –ADA upgrades to toilets –HVAC system

21. 21 DOL Capital Improvement Projects Prior Approval Process (Charges to the Grant)  OMB Cost Principle Circulars require prior approval from awarding agency –WIA formula grants – authority delegated to the governor –All other grants – N.O. approval required

22. 22 Capital Improvements All Programs  Tenant improvements - part of the lease agreements –see TEGL 7-04, page 14, number 14 for DOL guidance  Tenant improvements not included in lease agreement

23. 23 Program Income  SWA-owned building –Program income must be used for WIA, Wagner Peyser or UI Programs  Other programs

24. 24 Cost Free Occupancy (Any ETA Program)  DOL programs cannot pay a disproportionate share of facilities costs  There is NO free rent for partners … –RSA should contain information on shared space costs

25. 25 Operations & Maintenance Costs Examples  Utilities  Security  Grounds  Janitorial

26. 26 Payments or Equity Exceed Occupancy  WIA, JS or UI equity or DOL lease payments are greater than program occupancy –Actions must be taken to eliminate the space These actions need to be documented –Breaking lease agreements –WIA, JS, UI equity disposition will be prescribed by the Secretary

27. 27 Idle Space/Facilities & Unneeded Space  Idle Space/Facilities - space once needed, but no longer needed (allowable)  Unneeded Space – acquired too much space, never needed, never used (unallowable)  Space Plans

28. 28 Organizational Assessment – Idle Space/Idle Facilities/Unneeded Space  Books of account – examine charges versus program usage (occupancy)  Perform physical walk through of facilities at grantee and subgrantee levels

29. 29 State Workforce Agency (SWA) Property

30. 30 SWA Property  Old Section 193 of WIA – use of buildings: Allowed SWA buildings with federal equity to be used for One-Stop purposes

31. 31 SWA Property – New Section 193 of WIA, Effective February 14, 2007  2007 Revised Continuing Appropriations Bill –Gave States the federal equity in SWA buildings –Ends the practice of using W-P & UI grant funds to amortize the costs of acquiring such buildings –No longer authorizes the use of the SWA buildings for One-Stop purposes  TEGL 3-07 was issued to provide guidance on the changed requirements

32. 32 Ban on Amortizations Circulars and 2007 Appropriations  All Revised OMB Cost Principles Circulars, May 10, 2004  Revised WIA Section 193 Paragraph (b) –Limitation on use – A state shall not use funds awarded under this Act, the Wagner-Peyser Act or Title III of the Social Security Act to amortize the costs of real property that is purchased by any State on or after the date of enactment …

33. 33 SWA Buildings – Continued Use  Item 5 of TEGL 3-07  Allows W-P & UI amortized part of buildings to be used for WIA, UI & W-P activities  Limits the use of any part of buildings with Reed Act equity to UI & W-P administration

34. 34 State’s New Equity Property Disposition Options  Item 6 of TEGL 3-07  When SWA building no longer needed –Sell or Retain for other State purposes  If sold, sales proceeds are to be used for WIA, W-P and UI program activities

35. 35 State’s New Equity Property Retained  Item 6 of TEGL 3-07  If retained, must have appraisal to establish the current FMV  Cash equivalent of FMV is to be used for WIA, W-P and UI program activities

36. 36 Disposition Proceeds  Item 6 of TEGL 3-07  Deposit in interest earning account –Sales proceeds and/or –Cash equivalent of FMV  Interest or other earnings are also to be used for WIA, W-P & UI programs  Report on line 11.b. of ETA-9130

37. 37 Reed Act Equity in Property Dispositions  Item 6 of TEGL 3-07  Reed Act equity share in any SWA buildings dispositions must be returned to State’s account in the Unemployment Trust Fund per UIPL 39-97

38. 38 Review Questions

39. 39 Question #1  Question 1. An agency may define equipment at a lower dollar threshold than the federal requirement in order to track computer laptops given out to all of its case managers. TRUE or FALSE ?

40. 40 Question #1: Answer  Answer 1. TRUE: Policies and procedures instituted by a local or state agency may be more restrictive than federal requirements as long as the policies are consistent.

41. 41 Question #2  Question 2. Installation of a wheelchair ramp is not an allowable expense: TRUE or FALSE ?

42. 42 Question #2: Answer  Answer 2. FALSE: Repairs or renovation costs to meet ADA requirements are allowable.

43. 43Questions? If you have questions, please contact your Federal Project Officer