Grants Management
21st Century & Homeless
Education Staff Development
Office of Federal Programs
August 2013
Agenda
• Legal Background
• Grant Administration
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Determining Allowable Costs
Sub-grantee vs. Contract
Supplement Not Supplant
Federal Cost Principles
Items of Cost
Compensation for Personal Services
• Grants Management Systems
– Financial Management
– Procurement
– Inventory Management
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Legal Background
3
Legal Structure of Federal
Programs
• Statutes
– Program statutes (NCLB)
– General Education Provisions Act (GEPA)
– ESEA Flexibility
• Regulations
– Program regulations
– Education Department General Administrative
Regulations (EDGAR)
• OMB Circulars
• Guidance
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Levels of Authority
• Law (statute) - ESEA/NCLB
• Code of Federal Regulations (CFR)
– Title 34 Education http:/ecfr.gpoaccess.gov//
– Education Department General Administrative
Regulations (EDGAR)
• ED guidance www.ed.gov
– Non-regulatory guidance
– Policy letters
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Grant Administration
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Allowability Yes!
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How to Determine if a Cost is
Allowable
• Is the proposed cost allowable under the
relevant program?
• Is the proposed cost consistent with
program specific fiscal rules?
• Is the proposed cost consistent with
federal cost principles?
• Is the proposed cost consistent with
EDGAR?
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How to Determine if a Cost is
Allowable
• Is the proposed cost consistent with special conditions
imposed on the grant?
• Is the proposed cost consistent with the underlying
needs of the program
– Data driven decision making
– Target funds to areas of weakness
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Program Allowability
In general, there are 2 types of programs
– Specific rules regarding allowable costs
• E.g., 21st CCLC Title IV, Part B
– SEA level allowability activities
– 12 allowable uses of funds at LEA level
– Flexible program – general criteria
• E.g., Title I, Part A program funds
– Eligible students
– Purposes of program
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21st Century Allowablility
Local grantees are limited to providing activities
within the following:
• Remedial education activities and academic
enrichment learning programs;
• Mathematics and science education activities;
• Arts and music education activities;
• Entrepreneurial education programs;
• Tutoring services and mentoring programs;
• Programs that provide after-school activities for
limited English proficient students that emphasize
language skills and academic achievement;
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21st Century Allowablility
(Cont.)
• Recreational activities;
• Telecommunications and technology education
programs;
• Expanded library service hours;
• Programs that promote parental involvement and family
literacy;
• Programs that provide assistance to students who have
been truant, suspended, or expelled, to allow the
students to improve their academic achievement; and
• Drug and violence prevention programs, counseling
programs, and character education programs.
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Subgrant vs. Contact
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Subgrant vs. Contact
Subgrant
Contract
• Allowable activities based
on applicable statute, local
plan, State rules
• Management rules
• Allowable activities based
on terms and conditions of
contract
• Management rules
– EDGAR;
– Applicable OMB Circular;
and
– State law/policies and
procedures
– Terms of the contract; and
– State contract law
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Subgrant vs. Contract
• Subgrantee
– Determines who is eligible to participate in a federal
program
– Has its performance measured against whether the
objectives of the federal program are met
– Is responsible for programmatic decision making
– Is responsible for complying with federal program
requirements
– Uses the federal funds to carry out a program as compared
to providing goods or services for a program
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Subgrant vs. Contract (cont.)
• Contractor
– Provides the goods and services within normal business
operations
– Provides similar goods or services to many different
purchasers
– Operates in a competitive environment
– Provides goods or services that are ancillary to the
operation of the federal program
– Is not subject to compliance requirements of the federal
program
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Supplement not Supplant
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Supplement not Supplant
• Federal funds must be used to supplement
and in no case supplant (federal), state, and
local resources
“What would have happened
in the absence of
the federal funds??”
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Supplement not Supplant
May 21st CCLC program funds support communities
that are already implementing before- and afterschool activities?
• Yes. 21st CCLC funds may be used to expand and
enhance current activities provided in existing afterschool programs, whether supported by public or
private funds. For example, a grantee may use funds to
align activities to help students meet local and State
academic standards if those services are not part of the
current after-school program. Again, grantees must
bear in mind that 21st CCLC funds can be used only to
supplement and not supplant any Federal or nonFederal funds used to support current programs.
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Supplement not Supplant
Remember your
assurances!!!
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3 Presumptions of Supplanting:
• Auditors presume supplanting occurs if
federal funds were used to provide services.
1. Required to be made available under other
federal, state, or local laws
2. Provided with non-federal funds in prior year
3. Provided services to Title I schools and the
same services were provided to non-Title I
schools.
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Federal Cost Principles
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Federal Cost Principles
•A-21 Educational Institutions
• A-87 State, Local & Indian
Tribal Governments
•A-122 Non-Profit Organizations
•48 CFR pt. 31 For-Profit Organizations
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Cost Principles: Basic Guidelines
All Costs Must Be:
1. Necessary/Reasonable
2. Allocable
3. Legal under state and local law
4. Conform with federal law & grant terms
5. Consistently with Policies, Regulations, and Procedures
6. Accorded Consistent Treatment
7. In accordance with GAAP
8. Not included as match
9. Net of applicable credits
10. Adequately documented
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Necessary & Reasonable
1. Necessary and Reasonable
– Must be necessary for the performance or
administration of the grant
– Must follow sound business practices:
• Arms length bargaining (hint: procurement processes)
• Follow federal, state and local laws
• Follow terms of the grant award
– Fair market prices
– Act with prudence under the circumstances
– No significant deviation from established prices
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Necessary & Reasonable (cont.)
Data Driven Decision Making…
Critical
Needs
Strategic
Goal
Current
Performance
(based on
data)
Measurable
Objective
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Necessary & Reasonable (cont.)
• Practical aspects of “necessary”
– Do I really need this?
– Is this the minimum amount I need to spend to meet my
need?
• Practical aspects of “reasonable”
– Is the expense targeted to valid
programmatic/administrative considerations?
– Do I have the capacity to use what I am purchasing?
– Did I pay a fair rate? Can I prove it?
– If I were asked to defend this purchase, would I be
comfortable?
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Allocable
2. Allocable
– Can only charge in proportion to the value
received by the program
• Example: LEA purchases a computer to use 50% in
the Title VI program and 50% in a state program –
can only charge half the cost to Title VI
– Two (2) methods of allocating costs:
• Direct cost allocation
• Indirect cost allocation
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Basic Guidelines (cont.)
3. Legal under state and local law
– If you can’t do it under state law, you can’t pay for it
with federal funds
4. Conform with federal law & grant terms
– Example: Match Requirements
5. Consistently treated
– Must follow uniform policies that apply equally
to federal and non-federal activities
– Cannot assign cost as direct cost if indirect
under state programs
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Basic Guidelines (cont.)
7. In accordance with GAAP
8. Not included as match
9. Net of applicable credits
– Examples: purchase discounts, rebates or
allowances, recoveries or indemnities on losses,
insurance refunds or rebates, adjustments of
overpayments
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Basic Guidelines (cont.)
10.Adequately documented
Amount of funds under grant
How the funds are used
Total cost of the project
Share of costs provided by
other sources
– Records that show compliance
– Records that show performance
– Other records to facilitate an effective audit
–
–
–
–
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Federal Items of Cost
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Federal Items of Cost
OMB Circular
• 43 specific costs detailed
• Listed in alphabetical order
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Selected Items of Cost
• Advertising/PR
– Generally not allowable, except as specified in
Attachment B
• Alcohol
– Not allowable
• Audit Costs
– Allowable to the extent provided under A-133
– Other audit costs are allowable if included in a
cost allocation plan
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Selected Items of Cost
• Defense and Prosecution of Criminal and Civil
Proceedings, and Claims
– Legal expenses required in the administration of federal
programs are allowable
– Legal expenses for “prosecution of claims” against the
federal government are not allowable
• Employee Morale, Health and Welfare
– Health or first aid clinics, recreational activities, employee
counseling services are allowable
• Entertainment
– Amusement, diversion, and social activities are not allowable
• Fines and Penalties
– Not allowable
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Selected Items of Cost (cont.)
• Memberships, Subscriptions and Professional
Activities
– Meetings and conference where the primary purpose is
dissemination of technical information are allowable
– Includes costs of meals, transportation, facility rental, and
speakers’ fees
• Training
– Training for employee development is allowable
• Travel costs, including transportation, lodging, subsistence, and
related items, when traveling on business are allowable with certain
restrictions
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Selected Items of Cost (cont.)
• Salaries and Wages
– Allowable if proper time distribution records
– Time Distribution Records must be maintained
for all employees whose salaries are:
• Paid in whole or in part with federal funds
• Used to meet a match/cost share requirement
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Cost Principal: Personal Services
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Cost Principal: Personal Services
Periodic Certifications
• OMB Circular A-87, Attachment B, Item 8 (h)
(3). Periodic Certifications are commonly
known as Semiannual or Biannual
Certifications. They are required to be
completed at least every six-months. The only
personnel that may utilize this method are
employees who dedicate 100% of their time
during a fiscal year to one federal program or
cost objective.
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Cost Principal: Personal Services
Personnel Activity Reports
OMB Circular A-87, Attachment B, Item 8 (h) (4).
Personnel Activity Reports (PAR) are commonly known
as Time and Effort Logs or Monthly Logs. They are
required to be completed at least monthly. Personnel
that must utilize this method are employees who
dedicate their time to:
a. More than one Federal award,
b. A Federal award and a non Federal award,
c. An indirect cost activity and a direct cost activity,
d. Two or more indirect activities which are allocated using
different allocation bases, or
e. An unallowable activity and a direct or indirect cost activity.
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Time Distribution Records
• Overview of process:
– Estimate how employee will work
– Pay based on estimate
– Reconcile estimates to how actually worked
• Necessary documentation:
– Payroll records
– Personnel activity report
– Semi-annual certifications
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Required Time Distribution
Documentation
• Type of documentation depends on how
many “cost objectives” the employee
worked on
• These cost objectives must be connected to
the employee’s salary source
• What is a cost objective?
– A specific grant award, or other category of
costs, that requires the grantee to track specific
cost information
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Single Cost Objectives –
Semi-Annual Certification
• If an employee works on a single cost objective:
– Semi-Annual Certification
•
•
•
•
After the fact
Account for the total activity
Signed by employee or supervisor every six months
Prepared at least twice a year
– Example: “I hereby certify that for the period
January 1, 2012 through June 30, 2012 onehundred percent (100%) of my time and effort was
spent on Title I Administration.”
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Multiple Cost Objectives –
Personnel Activity Report (PAR)
• If an employee works on multiple cost
objectives:
– Personnel Activity Report (PAR) or equivalent
documentation
• After the fact
• Account for total activity
• Signed by employee
• Prepared at least monthly and coincide with
one or more pay periods
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Distributing Payroll Costs
1. Estimate how employee will work
• Must produce reasonable approximations
of the activity actually performed
2. Quarterly comparison of estimates to
actual costs
• If difference is less than 10% - annual
adjustment
• If difference is more than 10% - quarterly
adjustment
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Grant Management
Systems
46
Amendment Procedures
• May require prior approval
– Budget changes
• 10% or $100,000 (state may modify)
– Program changes
•
•
•
•
Change in scope or object
Change in key personnel
No cost extension
Contract with 3rd party to administer program
47
Use of Funds for Religion
Cannot use federal funds for:
– Religious worship, instruction
– Construction, remodeling, repair, operation, or
maintenance of religious facility
48
Real Property and Construction
Unless authorized by statute,
cannot use federal funds
for:
– Acquisition of real
property
– Construction
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Grant Management Systems
Three major “systems”
in grants
management:
Financial
Management
Inventory
Management
Procurement
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What Rules Apply?
State and local agencies must use fiscal
control and fund accounting procedures that
will ensure the proper disbursement of, and
accounting for, federal funds
– Section 441 of GEPA (general assurances)
– Section 9306 of NCLB (program assurances)
– Section 76.702 of EDGAR
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What Does that Mean?
All recipients of federal funds must be able to:
1. Spend federal money correctly; and
2. Prove that they spent federal money correctly
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Financial Management System
(FMS)
Seven (7) requirements:
1.
2.
3.
4.
5.
6.
7.
Financial Reporting
Accounting Records
Internal Control
Budget Control
Allowable Cost
Source Documentation
Cash Management
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Internal Controls
Internal controls are tools to help program and
financial managers achieve results and safeguard the
integrity of their programs
– Includes processes for planning, organizing, directing,
controlling, and reporting on agency operations
Objectives of Internal Controls
–
–
–
–
Effectiveness and efficiency of operations
Reliability of financial reporting
Compliance with applicable laws and regulations
Safeguarding assets
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Components of Internal Controls
Risk Assessment
Control
Environment
Monitoring
Control Activities
Information and
Communications
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Budget Control
• Must compare actual expenditures to
budgeted amounts on a routine basis; and
• Document all adjustments.
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Cash Management
• Payment Process
– Obligation
– Liquidation
– Drawdown
– Payment
• Obligation = Transaction that requires
payment
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Obligations
Type of Obligation
When Obligation Occurs
Acquisition of Property
Personal Services
by Employee
Date of binding
written commitment
When services
are performed
Personal Services
by Contractor
Travel
Date of binding
written commitment
When travel is taken
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Obligations (cont.)
• Every grant has a “period of availability” =
period in which grantee can obligate funds
• In general, ED cannot extend the period of
availability
– But has waiver authority
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Obligations (cont.)
• Grantees and subgrantees may begin to
obligate funds when:
– Awarding agency approves application; or
– Awarding agency determines application is
“substantially approvable”
• Reimbursement subject to final approval
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Obligations (cont.)
• Tydings Amendment
– Allows extra year to obligate funds
– Does not apply to all grants
• Under Tydings, funds are available for 24-27
months:
– 12-15 months under the grant award
– (July 1, 2013 – September 30, 2014)
– Plus 12 months
– (October 1, 2014 – September 30, 2015)
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Obligations (cont.)
• Under Tydings, unobligated funds can
usually be “carried over” from first year
• Generally, no limit on “carryover” unless
stated
– Title I, Part A = 15%,
• SEA may waive every 3 years
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Liquidations
• Liquidation = Settle an obligation by paying funds
• State must liquidate all obligations
within 90 days after the end of the period of
availability
– Example:
• Period of availability: July 1 – September 30th
• Liquidation period ends: December 31st
• State may impose shorter deadline on subgrantee
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Vendor Selection Process
• Must have written selection procedures
• Procedures must ensure all solicitations:
– Include a clear and accurate description of
technical requirements
– Identify all requirements vendor must fulfill
– Identify evaluation factors
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Contract Administration
All contracts supported with federal funds must
contain certain required provisions:
Remedies for breach, sanctions, penalties
Termination for cause and convenience
Compliance with federal statutes and executive orders
Reporting requirements
Patent rights
Copyrights
Access by federal agency, Comptroller General of US to
records of contractor
– Retention of records for 3 years after final payment
–
–
–
–
–
–
–
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Contract Administration (cont.)
Must maintain a contract administration
system that ensures contractors perform in
accordance with the terms, conditions, and
specifications of the contract
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Contract Administration (cont.)
As a practical matter:
• Must have written contracts (purchase order ok)
and invoice. Contract should include clearly
defined deliverables
–
–
–
–
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)
• Invoice should be reviewed & approved before payment
• Segregation of duties
• Documented approvals
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Inventory Management
Different rules for equipment and supplies
Equipment
– Federal Definition of Equipment
• Tangible personal 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
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Equipment
Must have adequate controls in place to
account for:
– Location of equipment
– Custody of equipment
– Security of equipment
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Equipment (cont.)
• Property records
– Description, serial number or other ID, title info,
acquisition date, cost, percent of federal
participation, location, use and condition, and
ultimate disposition
• Physical inventory
– At least every two years
• Control system to prevent loss, damage,
theft
– All incident must be investigated
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Supplies
Supplies = Everything Else
• Must maintain effective control and
accountability
• Must adequately safeguard all such property
• Must assure that it is used solely for
authorized purposes
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USDE Online Courses
http://www2.ed.gov/fund/grant/about/training
-management.html
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Contact Information
Mississippi Department of Education
Office of Federal Programs
Marcus E. Cheeks, Director of Federal Programs
359 North West St, Suite 111
Jackson, MS 39205
(601) 359-3499
mcheeks@mde.k12.ms.us
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