1. Budgets/Closeouts Reconciliations Expenditures Advances What’s New Laws, Regs, Policy Presenter: Vern Foster, Aging Programs Analyst II California Department of Aging Vern.Foster @ aging.ca.gov (916) 928-2746

2. Our adventure includes stops at…  The Fiscal Compliance Café (Ooooooooh…)  Budgets/Closeouts  Reconciliations  Monthly Expenditures  Advances  The Newsroom (Ahhhhhhhhhh…)  What’s new at CDA  The Fiscal Library (How Interesting…)  Applicable Laws, Regs, Policies for CDA’s programs

3.  45CFR requires Accurate, Complete, Current disclosure of financially assisted activities ◦ Budget Cycles  May 1 – Original Budget  December – Budget Revision 1 (includes OTO)  April 30 – Final Budget Revision (reconcile and align with actuals)  Last opportunity to adjust budget, and Request Transfers ◦ Closeouts – August 30  tight deadline in order to complete closeouts prior to end of Federal Fiscal Year (Sept 30 th )  Reallocate Unspent Allocations as OTO (Bud Rev 1)  Must align with Budgeted costs (more on this later)

4.  Due the 30 th of each month, submitted in CARS  Request For Funds (RFF) for future month (30 days ahead)  Financial Status Expenditure Report for prior month (30 days prior)  October RFF due Aug 30  July Expenditures due August 30  Initial Advances (beginning with July RFF) will be held until:  State Budget is enacted  Contract is executed and  AAA Budget is approved

5.  Monthly Advances (RFF) – California Aging Reporting Systems (CARS) ◦ 45CFR Financial Management Standards require AAA’s be paid in advance ◦ Advances shall be limited to the minimum amounts needed, for immediate cash requirements of the recipient organization  Executed Contract and Approved Budget in place?  Use Original Budget Display amounts when calculating 1 st couple months  New Process – Interim Transfers Budget Display will be issued and posted to CARS, moving the funds as requested in the Original Budget  No Executed Contract? Transfers will not be loaded into CARS ◦ Federal - 1 st 3 Months (1/12 th maximum) ◦ Must submit a RFF for each month  Must be based on projected actual costs  If no expenditures will be incurred in July or August – send Zero (0) Request  Admin and Program requests are combined for each Fund Source ◦ State – You may request your State Funds during first three months  No Monthly Limit (however, expenses must justify Request amount)  Report State expenses first, as advanced  Benefit - Fully Advance and Expend the funding, no more reconciling State

6.  Monthly Expenditure Reporting California Aging Reporting Systems (CARS) ◦ Report Actuals, not Estimates ◦ Report all activities and funding used to meet the costs  Report Program Income monthly  Report Available Match monthly  Unreported amounts cause federal share to be overstated ◦ CDA Expenditure Adjustments/Corrections  Adjust AAA records to reflect identified monthly adjustments  See Expenditure Reconciliations sheets (mailed monthly)  Ensure AAA and CDA records align each month  Take corrective action based on identified adjustments ◦ Report whatever costs you have on the books as of the due date.  Don’t delay submission waiting for Provider invoices  Do not hold reports, do not submit multiple months  Untimely reports skew CDA’s federal projections  Inaccurate federal projections affect Cash Flow which will ultimately affect AAA’s ◦ Reconcile AAA fiscal reports monthly before submitting expenditures  Eliminates major adjustments after year end  Report timely, accurately, by the due date Compare Budget to Y-T-D Actuals before reporting ◦ Examples of problem areas:  IIID Other (Health Promotion & Disease Prevention)  Over-reporting Admin  Nutrition Counseling vs Nutrition Education  Reporting costs in service categories that aren’t budgeted

7.  CDA uses CARS Reconciliation data to: ◦ Monitor funding sources, to ensure costs do not exceed allocations (IIIB, IIIC-1, IIIC-2, IIID, IIIE, VII) ◦ Monitor Budgeted amounts against YTD Expended amounts  AAA’s have 10 % discretion within each funding source  Notify AAA when they have exceeded the 10% ◦ Identify costs that have not been budgeted ◦ Make identifiable adjustments, as needed

8.  45CFR states “AAA’s shall submit a budget revision for category or line item changes which exceed 10%  CDA Standard Agreement states “AAA’s shall be compensated only as itemized in the approved budget”, with the following exception. ◦ AAA’s have a 10% discretion between service categories and/or budgeted line items within a funding source.  10% movement between IIIB funded services  10% movement between IIIC1 funded services  10% movement between IIIC2 funded services  10% movement between IIID funded services  10% movement between IIIE funded services  Transfers between funding sources require budget revision  BUDGET vs CLOSEOUT  If you exceed the service category budgeted amounts by more than 10 % CDA may disallow those costs that exceed.

9. Review Available Balances 10% Discretion between Service Categories Service Categories 10% of Total IIIB Budget 137,194

10.  1 st three months – up to 1/12 th ◦ Based on estimated need  Beginning with the October Advance, RFF is approved based on the lesser of Balance Available or Maximum Approvable  Balance Available = Allocation – Prior Advances (RFF)  You cannot exceed your contract allocation  “Maximum Approvable” RFF amount is a behind the scene calculation, accounting for YTD prior advances, YTD reported expenditures, and projects (2) months (using a calculated average month)  Maximum Approvable = Allows AAA to keep 1.5 months, (150%) of an average month’s expenditure as “Cash On Hand”. (See Example)  1.5 months calculation (Maximum Allowable Cash On Hand) – Unspent Advances = Maximum Approvable

12. CDA 151 Request for Fund/Expenditure Reconciliation with Instructions Maximum Approvable Calculation Example: RFF Month: APRIL (Due February 28) FEDERAL FUNDS AMOUNT REQUESTED 37,500 APPROVED REQUEST 35,053 CASH ON HAND CALCULATION III B Description Approved Thru Prior Month RFFYTD ADVANCES THRU MONTH OFMARCH 352,916 YTD Advances As Reported by AAAYTD EXPEND THRUJANUARY( - ) 258,646 less: YTD Expend Advances - Expenditures CASH ON HAND = 94,270Actual AAA Cash on Hand YTD Exp / months reportedCALCULATED AVG MONTHLY EXP258,646 / 7 = 36949 Average Monthly (from below) x 2PROJECTED EXPEND MONTHSFEBRUARY, MARCH( - ) 73,899 less: Proj 2 months Expend Actual Cash on Hand - Proj Expend ESTIMATED CASH BAL ON HAND ( = ) 20,371Projected AAA Cash on Hand Available for April Expenses MAXIMUM APPROVABLE ADVANCE CALCULATION YTD Exp / months reportedCALCULATED AVG MONTHLY EXP258,646 divided by 7 36,949 Average monthly expenses Calculate Max Cash Allowable150% OF AVG MONTHLY EXP36949 x 1.5= 55,424 Max Cash on Hand Allowable Less: Estimated Cash Bal on HandEST CASH ON HAND ( - ) 20,371 less: AAA Cash Balance Max Cash on Hand Allowable MAX APPROVABLE REQUEST* ( = ) 35,053Maximum Cash Advance After Contract Balance Review* Subject to funding available

13.  More Fiscal Accountability ◦ Fiscal Team will be returning questionable expenditure postings  Costs posted to services that are not budgeted ◦ Fiscal Team will be returning questionable advance requests  Funds requested are in excess of Maximum Approvable  Expenditures may be understated  Advances may be overstated  Expenditure and Advance records may not be reconciled  Funds requested are less than projected expenditures  Expenditure and Advance records may not be reconciled  Expenditures may be overstated

14.  Tightening of Expenditure/Contract spending  More Federal scrutiny of all of our fiscal processes, particularly Expenditure and Advance processes  Over-Advancing (in excess of actual need)  Underspending (Grants not fully expended)  More Fiscal Accountability ◦ Fiscal Team will be returning questionable expenditure postings and advance requests  Under/Over budgeted amounts  Under/Over advance  Tightening of Monthly reporting  Timely reporting - monthly  No more submitting 2-3 months at a time  Late and sporadic AAA monthly reporting causes inaccurate projections at the Statewide level

15.  Contract Under-performing… a AAA Fiscal Responsibility FISCAL OFFICER will:  Ensure contract funds are fully expended  Work with Administration and Program staff monthly  Monitor AAA Direct and Provider Contract  Expect closer monitoring by CDA Program and Fiscal staff  AAA’s will notice an increase in calls from CDA staff  AAA’s that appear behind in their spending will be asked to provide a plan for expending all funds

16. In the current fiscal climate:  Funding is Tight! Every government entity is under increased scrutiny and accountability for funds.  Federal Audit findings related to late paying out of funds  State Controller is scrutinizing payment processes  Unreconciled Advance Requests - Inability to make accurate Expenditure and Cash projections  Every year we that we show unspent funds we are showing that we don’t have a need for the funding, therefore we risk losing Federal Funds  Potential loss of federal baseline dollars  Potential loss of OTO

17.  Interim Transfer Process ◦ Original Budget transfer requests will be posted to an Interim Budget Display in order to officially move the transferred funds  Fund transfers will be officially posted and available for use in September, rather than waiting for Amendment 1 in November/December  Interim Budget Display will be posted to CDA’s website, using the new “ AAA Budget Displays” tab  Fiscal Officers and Directors will be notified of posting via email  AAA’s may begin requesting Advance funds in the revised funding categories  AAA’s that have not submitted fully executable contracts will not see their original budget transfers posted until both Original and Amendment 1 contracts have been fully executed

18.  CDA Contract Funded Property Reporting ◦ $500 Limit has been established  PM forthcoming…  AAA’s must track equipment with a cost of $500 or more  New CDA 32 (Property Form)  New CDA 248 (Request to Dispose Form)  New CDA 248 Process to involve CDA Program and Fiscal staff

19.  Audit Determinations recoupment ◦ CDA will no longer roll disallowed costs forward to the current year.  Disallowed costs will be invoiced and must be repaid to CDA, using local funds, to be remitted to the Federal government  State Controller determined that these funs must be remitted to the federal government  Unearned Funds recoupment ◦ CDA will no longer roll unspent Cash Advance funds forward to the current year as an Advance.  Unearned Cash identified in the Closeout will be invoiced, and must be repaid to CDA.

20. Audit Findings – Provider Match CDA Audits has found that many AAA’s have not been testing Provider Match  Provider Match must be tested by AAA.  Immediately begin testing provider match  Can lead to disallowed costs if match is not verified  Use risk-based approach to determine amount of testing samples  If audit of Match has never been performed – test 100% to establish risk  CDA Audits will begin verifying and disallowing costs associated with untested provider match Contact CDA Audits for more information

21.  Older Americans Act - 2006 (OAA)  Title III – Grants for State and Community Programs on Aging  Title VII – Allotments for Vulnerable Elder Rights Protection Activities  Section 304 – Admin Allotments and Federal Share (Match language)  Administration - Not more than 10% of a State’s federal allotment shall be available for paying the costs of area plan administration  Admin Match - Of that 10%, Not more than 75% shall be available for paying the cost of administration of area plans  Restated - Admin Match = 25%  Program - Of the remainder of a State’s federal allotment, not more than 85% shall be used for the cost of supportive services, senior centers, and nutrition services  Equals 15% Overall Program Match for IIIB, IIIC and IIID  Section 309 – Of the amounts required to meet the non-federal share (Match), amounts exceeding 10% shall be from State sources  Restated – AAA Program Match = 10%  Restated - State Program Match = 5%  25 % of the non-federal share (Match) shall be met by local public sources  Restated – 25% of all AAA Match must come from public sources

22.  Older Americans Act -2006 (OAA)  Older Californians Act (OCA)  Code of Federal Regulations (CFR)  Grants Management  Cost Principles  California Code of Regulations (CCR), Title 22  CDA Program Specific Regulations  CDA Standard Agreement  Contract Terms and Conditions  DPA Rules for Personnel and Travel  Program Memos (Policy)  Data Dictionary – Service Unit Definitions More later…

23. ◦ Section 306, 307 – Requires the Area Plan to identify an Adequate Proportion of IIIB allotment to be spent on services associated with:  Access to Services – Transportation (to include health and mental health services), Outreach, I & A and Case Management  In-Home Services – to include supportive services for families of Alzheimer’s disease and related disorders  Legal Assistance CDA monitors to ensure AAA’s have met their approved Adequate Proportion of these priority services. o Section 308 – Transfers  Allows transfers of not more than 40% between IIIC-1 and IIIC-2  Allows transfers of not more than 30% between IIIB amd IIIC  Administration on Aging PROGRAM INSTRUCTION states there is no authority for states to transfer in or out of IIID or IIIE

24.  Older Californians Act -1997 (OCA) ◦ Established State’s commitment to it’s older population  State funding removed from Governor’s Budget - 2009  CBSP Program funding eliminated  Law remains in effect  Only Health Insurance Counseling and Advocacy Program (HICAP) funding remains

25.  Code of Federal Regulations (CFR) Grants Management  45CFR74 – Non-Profits, Hospitals, Institutions of Higher Education  45CFR92 – State and Local Governments Primary areas covered  Standards for financial management systems  Payment – Advances required  Period of availability of funds  Allowable Match rules  Program Income (Grant Related Income)  Budget Changes (Revisions)  Procurement

26. Cost Principles – Allowable Costs  2CFR220 - Institutions of Higher Education (OMB A-21)  2CFR225 - State and Local Governments (OMB A-87)  2CFR230 - Non-Profits (OMB A-122) Primary areas covered  Appendix A – General Principles  Factors affecting allowability  Reasonableness  Allocable Costs  Appendix B - Selected Items of Cost (Costs Listing)

27. General Requirements - Requirements State agencies shall meet to receive grants to develop comprehensive and coordinated systems for the delivery of supportive and nutrition services under Title III (OAA)  45CFR1321  State Agency Responsibility  AAA Responsibility Some Specific Fiscal Related Areas Covered  Definitions of Frail and In-Home Services  Means Testing – prohibited  Opportunity to Voluntarily Contribute  Area Plans must be submitted annually  AAA will not fund Program Development (PD) or Coordination (C) activities with IIIB dollars unless it has spent it’s Administration allotment  PD and/or C activities must be submitted for general public review and comment

28.  California Code of Regulations (CCR), Title 22, Division 1.8, Chapter 3 – Title III Programs ◦ California Dept. of Aging Program Specific Regulations  Designation of PSA’s and AAA’s  AAA General Responsibilities  Area Plan Contents  Requires Goals for each Program Development and Coordination activity  Allocation, Use and Transfer of Funds  Unexpended Title III & VII funds reallocation (OTO)  Equipment  Home & Community Based Projects  Innovative Pilot Projects  Baseline Services  Minimum Budget Requirements  Direct Service Approval Requirements

29.  CDA Standard Agreement ◦ Contract Terms and Conditions  DPA Rules for Personnel and Travel  Departmental Program Memos (Policy) ◦ New Departmental Policies ◦ New AAA Requirements  Data Dictionary ◦ Service Category Definitions ◦ Service Unit Definitions

30. Thank You All For Coming!