I Can’t Buy What?
An Overview of GEAR UP Fiscal Operations
Stephen Hart
Susan St. George
Arizona GEAR UP
(602) 776-4614
stephen.hart@nau.edu
Washington State GEAR UP
(360) 753-7834
susans@wsac.wa.gov
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 1
 SESSION OBJECTIVES
► Carefully walk you through the world of federal
cost principles.
► Help you better understand GEAR UP’s 1:1 match
obligation and how you can help your GEAR UP
project satisfy it.
► Answer your specific questions about GEAR UP
fiscal operations.
► Provide you with some tools and resources that
may address some of your specific GEAR UP
grant administration concerns.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 2
 Background
► The “Misuse of Public Monies” Top 6
http://www.bizjournals.com/washington/print-edition/
2012/04/06/the-general-services-administration.html
 M. Johnson, B. Peck, S. Leeds, former GSA officials
(Washington, DC)
“…GSA’s planning and expenditures for the 2010 Western Region Conference were incompatible
with its obligation to be a responsible steward of the public’s money...”
-- Brian Miller, U.S. Inspector General
http://www.azauditor.gov/pastIR.htm
 J. Thor, former school principal (Tempe, AZ)
 G. Conway, former district superintendent (Page, AZ)
 R. Canchola, former county superintendent (Nogales, AZ)
 C. Ballard, former university business manager (Tucson, AZ)
 J. Wimmer, former university accountant (Salt Lake City, UT)
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 3
 Burning Issues
► What
GEAR UP finance-related topics or issues
would you like to see addressed in today’s
workshop?
► Standard Disclaimer
► Standard Plea For Mercy
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 4
 OUTLINE
►Introduction
 Background
 Burning Issues
► Federal Cost Principles
 The Allowability Test
 Hierarchy of Governing Docs
 Match
► Special Topics
 Fiscal Agent; Audit Readiness; Pro-Rating Costs; Time & Effort
 Teacher Time; Volunteer Time; Public Relations; Food
 Facilities; Discounts; Indirect Costs; Scholarships
► Q&A
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 5
 The Allowability Test
Is the expense:
► Allowable and necessary to implement the
program;
► Reasonable;
► Allocable to program objectives; and
►Compliant with the program’s federal
administrative regulations
►Consistently treated (i.e. a cost your
organization can normally pay for)?
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 6
 Hierarchy of Governing Docs
► Statute: Public Law 110-315,
GEAR UP program legislation
(very broad)
► Program Regulations:
EDGAR and 34 CFR Part 694
(much more detailed)
► Federal Cost Principles: OMB
Circulars (even more detailed)
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 7
 Hierarchy of Governing Docs
The documents that govern GEAR UP:
► are diverse and sometimes confusing
► may have inconsistencies that come from
government and agency policies trying to
accommodate many unique grant programs
When you encounter conflicts or inconsistencies:
► begin with the GEAR UP statute
► move through the hierarchy (program
regulations, OMB Circulars)
► seek clarification from USDOE Program Officer
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 8
 Statute
► The statute is a federal law that authorizes or
governs a program. In the case of GEAR UP, the
term statute refers to the program legislation found
in Title IV of the 1998 Amendments to the Higher
Education Act (HEA) of 1965 [P.L. 105-244].
► The statute sits at the top of the hierarchy but
affords the Secretary of Education the authority to
set program-specific policies, which are commonly
known as program regulations. The statute only
broadly defines how the program should operate.
http://www.ed.gov/policy/highered/leg/hea98/sec403.html
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 9
 Program Regulations
► Program regulations provide additional
guidance when the statute is silent or vague on an
issue. They provide details that govern the
application competition, dictate how programs will
be implemented, and other implementation details.
► There are two types of regulations that you
should become familiar with – EDGAR and GEAR
UP program regulations.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 10
 EDGAR
► The Education Department General
Administrative Regulations (EDGAR) are agencywide and set broad administrative policies that
impact nearly all grant programs funded at the
USDOE. The regulations are published in Title 34
of the Code of Federal Regulations (CFR). The
pertinent sections of EDGAR to your grant
administration are 34 CFR parts 74, 75, 77, 79, 80,
81, 82, 84, 85, 86, 97, 98, and 99.
http://www.ed.gov/policy/fund/reg/edgarReg/edgar.html
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 11
 GEAR UP Program Regulations
► Whereas EDGAR sets broad agency-wide policies,
the GEAR UP program regulations addresses the
very unique administrative matters associated with
GEAR UP.
► GEAR UP program regulations are published in 34
CFR parts 694.
http://www.ecfr.gov/cgi-bin/textidx?c=ecfr&tpl=/ecfrbrowse/Title34/34cfr694_main_02.tpl
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 12
 OMB Circulars
► Cost principles
A-21, Educational Institutions.
A-87, State, Local Governments and Indian Tribe Governments
(Includes School Districts).
A-122, Non-Profit Organizations.
► Administrative Requirements
A-102, State and Local Governments.
A-110, Institutions of Higher Education, Hospitals, and Other NonProfit Organizations.
► Audit Requirements
A-133, States, Local Governments, and Non-Profit Organizations.
OMB Circulars:
http://www.whitehouse.gov/omb/circulars/
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 13
 Match? In-Kind? In-Kind Match?
► “Match” is a general term that refers to
anything donated to the project, regardless of who
paid for it. In the case of GEAR UP grants, it
means the non-federal share of program costs.
► "In-Kind" refers to non-cash contributions of
goods or services made by third party individuals
or organizations to GEAR UP Projects.
► Match must follow the same rules as the money
you spend – allowable, reasonable, and allocable.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 14
 GEAR UP Matching Requirements
► Dollar-for-dollar or 1:1 match - for every dollar of
federal grant money spent on the project, the grantee
must find an equal dollar amount of match in the
form of state, local, or donated funds.
► It is the grantee’s job to generate and document
this match with the same care and attention to
accuracy, accountability, and timeliness as
documenting the use of federal grant funds.
► If a grantee does not meet the match requirement,
they could have their federal funds reduced, or their
award could be terminated.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 15
 Why Match????
► When Congress created the GEAR UP
program, they wanted to create partnerships that
would sustain themselves.
► The result is the dollar-for-dollar match
requirement. The total project cost is shared
between federal and non-federal sources.
► Match helps ensure that local partnerships are
created and that GEAR UP grant resources are
being directed to communities.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 16
 And, the Details …
► Match can be counted only ONCE.
► Matching contributions cannot be shifted from
one project to another.
► Matching contributions must be obligated
during the grant period.
► Match cannot be claimed from other sources/
programs that are federally funded.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 17
 Ask yourself:
► When considering match, could I pay for this
(item or service) using my federal GEAR UP
funds?
► Is it legal and ethical?
► Does it pass the “headline test”?
If in doubt, contact your grant’s fiscal agent or, if
you are the fiscal agent, your Program Officer.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 18
 Match Documentation Must:
► Capture the match identified with a particular
project;
► Contain adequate source documentation for
claimed match; and
► Provide clear valuation of in-kind match
documentation.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 19
 Special Topic: Fiscal Agent
► The Fiscal Agent is the entity that wrote the
GEAR UP grant and is named specifically as the
grantee in the annual Grant Award Notification
(GAN).
► The Fiscal Agent bears primary responsibility
for fiscal reporting, compliance with federal cost
principles, and satisfying the match obligation.
► The Fiscal Agent chooses partners and
creates the terms/conditions that formalize and
govern those partnerships.
 If in doubt about who your fiscal agent is, ask your GEAR UP
Director.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 20
 Special Topic: Audit Readiness
► Fiscal Agents must maintain accurate, current
and complete records that disclose financial
results and connect financial data to program
data.
► What keeps Fiscal Agents up at night?
Anytime a GEAR UP cost is incurred, or a cost
share claim is made, you have to think:
 What will a stranger from Washington DC, think of this cost,
based on the available documentation, assuming (s)he is armed
only with: an accounting degree; a cursory understanding of
college access / GEAR UP; a calculator; and a mandate to find
something to report to his/her chain of command?
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 21
 Special Topic: Pro-Rating Costs
► The “allocable” test: GEAR UP costs / cost
share must be applied in proportion to relative
benefits, as approximated through reasonable
methods.
► In other words, if the benefits of a good or
service extend beyond the GEAR UP cohort, prorate the associated costs / cost share.
► The “room on the bus” caveat: it is not
necessary to pro-rate if the primary reason a
good or service is procured is to satisfy a GEAR
UP objective, and the benefits spill over to
others.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 22
 Special Topic: Time and Effort
► Federal regulations require that every GEAR
UP staff whose salary is supported in full or in
part need to document the time, effort, and
activities during any given pay period.
► Develop a process for collecting time and
effort sheets regularly and accurately.
► When you use in-kind personnel contributions
as match, they have to fulfill the same reporting
obligations as if they were paid with federal
funds.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 23
 Special Topic: Teacher Time
► Generally, on-contract teacher time (salaries +
benefits) cannot count as match because of the
perception that compensating teachers during
the contracted school day cannot be directly
related to the GEAR UP grant.
► If, however, teachers are being paid by the
school district (from a non-federal source) or are
volunteering their time to conduct activities
outside their normal duties that are specifically
related to the GEAR UP grant, the hours of those
activities (valued at that teacher’s salary+benefit
rate) may count as match.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 24
 Special Topic: Volunteer Svcs
► If volunteers provide services in their
profession, that time is valued at their rate of pay
and benefits. EX: A university admissions officer
gives a presentation to GEAR UP families on
college admissions requirements.
► If volunteers provide services other than their
profession, they should be valued at the rate of
what someone would ordinarily be paid to do the
work rather than their actual paid wage.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 25
 Volunteer Services (continued)
► If the organization has no one doing similar
work, then the value needs to be consistent with
what is paid for that type of work in the local area
or you can use the value of volunteer time for
your state.
www.independentsector.org/volunteer_time
► Keep supporting documentation on how the
rate was determined.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 26
 Special Topic: Public Relations
► Use caution when incurring public relations
costs or counting them as match.
► OK: briefing current and potential stakeholders and communicating with parents and
students by highlighting GEAR UP activities in
websites, newsletters, and other similar media.
► OK: promoting a college-going culture with
strategic and/or inspirational messages using
selected forms of media and/or guest speakers.
► Not OK: lobbying; fundraising; advertising;
entertaining; socializing; sales/marketing.
 anything designed “solely to promote the governmental unit.”
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 27
 Special Topic: Food
► Food is not specifically prohibited by OMB
Circulars, but entertainment expenses are.
► Some GEAR UP programs will adhere to
policies that prohibit the purchase of any kind of
food under any circumstances, or require
specific permission from your fiscal agent, who
in turn must secure it from your federal program
officer.
► If food purchases are permitted, make sure the
use of public funds to buy food is well-justified
(i.e. the success of the event depends on it).
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 28
 Special Topic: Facilities
► Use caution when counting facilities as match.
► The space must be justified, allowable or
reasonable – generally this should be approved
as part of your grant agreement.
► Avoid counting classroom space used during
the school day.
► It is likely that your organization uses
depreciation or cost allowance to value facilities
match.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 29
 Special Topic: Discounts
► Use caution when counting discounts and/or
waived fees as match.
► Ask vendors, in their quotes and/or invoices,
to specify the exact amount of the discount they
are providing, and indicate that it is specifically
for GEAR UP.
► Best Practice: instead of getting 25% off four
items, pay for three and have the vendor specify
that the fourth is free.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 30
 Special Topic: Indirect Costs
► These are “overhead” costs which are difficult
to readily and specifically identify with a
particular grant project or institutional activity
(e.g. centralized services; lighting; electricity).
► Are
allowable, as GEAR UP costs and/or match,
but are limited to 8% of the approved federal
direct costs under the award, or your indirect
cost rate agreement (whichever is less).
► Can
only be captured/reported if you have a
formally stated negotiated indirect cost rate,
resulting from a formally submitted proposal,
from a cognizant federal agency.
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 31
 Special Topic: Scholarships
► Scholarships are a common component of
GEAR UP programs, esp. State grants.
► Know which basic statutory requirements your
grant adheres to:
 either the existing Higher Education Act (HEA)…
http://www2.ed.gov/policy/highered/leg/hea98/sec403.html
 or the recently reauthorized HEA…
http://edocket.access.gpo.gov/2010/2010-4869.htm
► Scholarships are specifically authorized as
matching by Section 404(c) of the HEA, but use
caution when valuing them
 Carefully document the amount of waivers or financial
assistance paid to students from NON-FEDERAL sources (State,
local, institutional, or private funds)
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 32
 Some Good Online Resources
GEAR UP Statutes, Regulations, and Circulars:
http://www2.ed.gov/programs/gearup/legislation.html
Washington GEAR UP resource list:
http://www.gearup.wa.gov/resource-list
Arizona GEAR UP policies, procedures, forms, etc:
http://www4.nau.edu/gearup/fiscalop.html
USDOE’s “Fiscal Accountability for Administering ED Grants”:
http://www2.ed.gov/programs/nathawaiian/fiscal.pdf
USDOE’s “GEAR UP Matching Requirements”:
http://www.edpartnerships.org/Content/NavigationMenu/Events/20
12_NCCEP_GEAR_UP_Annual_Conference/Session_Presentation
s_and_Files/Session_Files_and_Presentations.htm
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 33
 Questions?
Stephen Hart
Susan St. George
Arizona GEAR UP
(602) 776-4614
stephen.hart@nau.edu
Washington State GEAR UP
(360) 753-7834
susans@wsac.wa.gov
GEAR UP Fiscal Operations Overview ● October 23, 2012 ● 34