CASH MANAGEMENT
NYSFAAA
Date
Nautochia Webb
U.S. Department of Education
Training & Information Services Division
Financial Responsibility Standards
All schools must
meet general
standards and
past performance
standards
2
Financial Responsibility
General Standards
Public Institutions
• Considered financially responsible if:
– School provides ED with a letter from an
official of the appropriate state entity that has
legal authority to make such designations,
confirming that it is a public institution and
– School is not in violation of any past
performance requirement under 668.174
3
Financial Responsibility
General Standards
Proprietary or Private Nonprofit Institutions
• Composite score of at least 1.5
• Sufficient cash reserves to make required
returns of Title IV funds
• School is current in its debt payments, and
• School is meeting all of its financial
obligations
• Audited financial statements do NOT express
doubt about continued existence of school
(e.g., “going concern” or an adverse,
qualified or disclaimed opinion)
4
Composite Score Calculation
(example: Proprietary Institution)
Step 1:
Calculate
the ratios
Step 2:
Calculate
strength
factor score
Primary
.08x20=
Reserve=.08 1.600
Equity Ratio= .332x6=
0.332
1.992
Net Income
[.051x33.3]+
Ratio = 0.051 1 = 2.698
Step 3:
Calculate
weighted
score
1.600x30%=
0.480
1.992x40%=
0.797
2.698x30% =
0.809
Step 4: Add the weighted scores and
round to one digit after decimal point
2.086 = 2.1
5
Composite Score Scale
Score
3.0
Passed Financial Responsibility Standards - No Requirements
1.5
1.4
1.0
.9
-1.0
6
With Conditions – Cash Monitoring or Reimbursement Based on
School Participation Division Risk Assessment
OPTIONS:
(1) CM Level 1
(2) CM Level 2
(3) Reimbursement and/or other reporting as required by School
Participation Division
Failed Financial Responsibility Standards
OPTIONS:
(1) Post a Minimum 50% Letter of Credit (LOC)
(2) Provisional Certification - minimum 10% LOC and cash
monitoring level 1 or 2, or reimbursement
Refund Cash Reserve Standards
• School is considered to have sufficient
cash reserves if it meets one of the
following:
– Satisfies the requirements of a public school
– Is located in a state that has a tuition recovery
fund approved by the Department and the
school contributes to the fund, or
– Demonstrates that it makes its Returns to Title
IV Funds in a timely manner
7
Timely Refund Standard
• School demonstrates it makes refunds
timely if fewer than 5% of required refunds
sampled in audit or program review were
late
Timely Return of Title IV Funds
• School must perform calculation within 30
calendar days of date that school
determines student is a withdrawal
• School must return funds to Department
within 45 calendar days of date that school
determines student is a withdrawal
– Return of funds is distributed to Title IV
programs per order specified in the law
9
Return of Title IV Funds
• Statutory formula that determines amount
of Title IV aid a student has earned during
his/her period attendance
• Applies to any Title IV student who begins
attendance and then completely
withdraws, or otherwise ceases
attendance
10
Return of Title IV Funds
• Student earns Title IV through attendance
– Percentage of aid earned is equal to
percentage of payment period or period of
enrollment completed
• Percentage of completion is calculated
using
– calendar days in credit hour programs
– scheduled clock hours in clock hour programs
11
Return of Title IV Funds
School is responsible to return Title
IV funds disbursed, but not earned
by student
12
Financial Responsibility and
Current in Debt Payments
• A school is not current in its debt
payments if
– It is in violation of any existing loan agreement
at its fiscal year end, or
– Fails to make a payment in accordance with
existing debt obligations for more than 120
days and at least one creditor has filed suit to
recover funds under those obligations
13
Past Performance Standards:
All Schools
• A school is not financially responsible if
– A person who exercises substantial control over
the school owes a liability for a Title IV violation,
unless the liability is being repaid in accordance
with agreement with the Department
– In the last five years, the school has been subject
to a limitation, suspension or termination action or
has entered into an agreement to resolve a
limitation, suspension or termination action
initiated by the Department or guaranty agency
14
Past Performance Standards:
All Schools
• A school is not financially responsible if the
school
– Has had an audit finding in either of its two most
recent compliance audits or a program review
finding for its current or preceding two fiscal
years, that required repayment of more than 5%
of Title IV funds for the years covered by the
review or audit
– Has been cited during the last five years for
failing to submit audits as required
– Has failed to resolve any compliance issues
identified in program reviews or audits
15
Proprietary Schools and
the 90/10 Rule
• May derive no more than 90% of its
revenues from the Title IV federal student
aid programs
• 10% of revenue must come from non-Title
IV funding
– Tuition, fees, other institutional charges,
school activities necessary for students
enrolled in those programs
16
Proprietary Schools and
the 90/10 Rule
• Must calculate using the cash basis of
accounting
• Must report as a footnote in annual
financial statements
• See 34 CFR 668.14(b)(16) and 34 CFR
668.28
17
The 90/10 Formula
Applicable only to Proprietary Schools
FSA program funds (except LEAP or FWS) used for tuition, fees
and other institutional charges to students
÷
The sum of revenues generated by the school from: (1) tuition,
fees and other institutional charges for student enrolled in eligible
training programs, plus (2) school activities* necessary for the
education or training of students enrolled in those eligible
programs
*to the extent not included in tuition, fees and other institutional charges
18
Campus Based Programs
Information
and
Additional Fiscal
Information
19
Campus-Based Administrative
Cost Allowance (ACA)
• Use to defray costs of administering the
program
• School must request and draw down
• ACA is based on Campus-Based
expenditures (federal plus nonfederal) for
the award year
– FSEOG funds disbursed to students
– FWS gross wages paid to students
– Perkins Loans advanced to students
20
Campus-Based Requirements
• Application process
– Mark programs on PPA (new school)
– Complete FISAP by October 1, 2012
• Application for 2013-2014
• Report for 2011-2012
• Matching requirements
• Other uses of funds
Get Ready – Fiscal Obligations
21
Campus Based
Matching Requirements
• General rule
– Federal share may not exceed 75% of
FSEOG, FWS or Perkins expenditures
• Automatic waivers of FSEOG and FWS
matches for Titles III and V institutions
• Specific FWS federal match waivers
Get Ready – Fiscal Obligations
22
FSEOG Match
• Nonfederal match
–
–
–
–
Institutional grants and scholarships
Tuition or fee waivers
State scholarships
Foundation or other charitable organization
funds
– Various methods for matching
• Federal allocation may not exceed 75% of
total awards made
23
FWS Match
• Nonfederal match may be noncash
• Private nonprofit organization or federal,
state, or local public agency employer
– Up to 90% federal for up to 10% of students
• Private for-profit employer
– Minimum 50% nonfederal match
24
FWS Automatic Match Waivers
• If work performed by student is for the
institution, a public agency or a private
nonprofit organization, AND
• Student is a reading tutor, math tutor and/or
performing family literacy activities, THEN
• Funds used to pay students may be 100%
federal funds
Get Ready – Fiscal Obligations
25
FWS Community Service
Requirements
• School must use 7% of total allocation
for community service employment
• Must include one reading tutor project
or family literacy project
Get Ready – Fiscal Obligations
26
Pell Administrative Cost
Allowance
• Use to defray costs of administering the
program
• Funds automatically sent by EFT to
institution periodically during award year
• $5 per unduplicated Pell recipient per
award year
– ED/FSA must have accepted origination and
disbursement record in COD
27
Common Origination & Disbursement
•
Record the amounts for Federal Pell Grants and Direct
Loans as reported in COD
•
The COD website provides a number of reconciliation
tools, including several reports:
− Pell Electronic Statement of Account (ESOA)
− Pell Year To-Date (YTD)
− Direct Loan Funded Disbursement List
− Direct Loan School Account Statement (SAS)
G5
•
Record the amounts as reported in G5
•
G5 replaced Grant Administration and Payment System
(GAPS), including the e-Payments functionality used by
schools to draw down Campus-Based, Federal Pell Grant
(Pell Grant), and William D. Ford Federal Direct Loan
(Direct Loan) funds
Financial Aid Office Responsibilities
•
Develop written policies and procedures
•
Adhere to principles of separation of duties
•
Keep current on changes in laws and regulations
•
Advise and counsel students/parents about financial aid
•
Determine students’ eligibility for financial aid
•
Make financial aid awards to students
Financial Aid Office Responsibilities
•
Determine the amounts disbursed each month from each
program (according to Financial Aid Office records).
Business Office Responsibilities
•
Maintain records consistent with G5
•
Project cash needed to cover disbursements
•
Obtain authorization to pay Title IV funds
•
Reconcile accounts
•
Assist in completing applications and FISAP
Business Office Responsibilities
•
Be aware of changes in Title IV regulations
•
Make required refunds of Title IV funds
•
Determine the amounts disbursed each month from each
program (according to Business Office records, ledger,
etc.).
Separation of Duties
•
Reduces the risk of errors or inappropriate actions
•
Serves as a check on the work of each area involved in
the processing and delivery of Title IV funds
Checks and Balances
•
The Financial Aid person who awards Title IV funds may
not:
•
sign checks or deliver them to students;
• deliver cash to student; or
• credit student accounts with Title IV funds to cover
allowable costs.
•
The Business Office person who reconciles federal cash
should not also receive federal cash or disburse it.
Automated Systems
•
Enhances accuracy and efficiency, but can blur the
separation of duties
•
Schools must keep awarding and disbursement separate
•
Information entered and controlled by one office cannot
be changed by another office
Cash Management
Cash Needs, Disbursement Rules and ReportingImmediate Need:
•
Amount of Title IV program funds a school needs to make
disbursements within three business days following the
date the school receives the funds:
Anticipated disbursements total
minus Balance of cash on hand (Title IV)
minus Anticipated recoveries
minus ACH/EFT cash in transit
equals projected immediate need
Disbursement
•
Defined as the date a school credits a student’s account
at the school or pays a student or parent directly with –
•
•
•
38
Funds received from the Department
School funds used in advance of receiving funds from the
Department
Disbursement date reported to COD must be the actual
date of disbursement to the student’s account
Late Disbursements
•
Consider if ED processed SAR/ISIR with EFC
before student became ineligible
Ineligible students:
- DL: enrolled less than half-time
- Pell, FSEOG, and Perkins: no longer enrolled
Managing Federal Funds
•
Schools must not request funds that exceed their
immediate need for those funds
•
•
Excess Cash
•
40
Funds received from G5 must be disbursed to students within three
business days of receipt
Any amount of Title IV funds not disbursed to students by the end of
the third business day after receipt
Funding Basics
•
•
•
•
41
Funding is specific for each program and for each award
year
Funding is not student specific
Timelines and deadlines for reporting disbursements to
COD
Actual disbursements may be reported up to 7 days prior
to disbursement date and must be reported no later than
15 days after the disbursement date (30 days for
disbursements prior to April 1, 2013)
Reporting Disbursements: G5
•
Cash is made available in school’s G5 account through
initial authorization and subsequent increases
•
G5 records continually update, reflecting
− changes to authorization
− cash draws by the school
•
School cannot draw G5 cash that exceeds authorization
•
COD makes necessary cash adjustments to authorization
Pell Current Funding Level (CFL)
•
•
•
•
43
Pell Grant funding is records first
Schools submit actual disbursement records to COD
COD sends data for accepted actual disbursements G5 to
create or increase authorization
G5 makes funds available in the amount of accepted
disbursements
Direct Loan Current Funding Level
•
•
•
44
New schools: Loan support team works with school to
determine appropriate initial funding level
Continuing schools: Award year initial authorization
based on prior year disbursement history
Increases for all schools based on actual disbursement
records accepted by COD
Funding Process
School makes or
schedules actual
disbursements to
student accounts
School reports
actual
disbursements to
COD
COD accepts actual
disbursement records
and raises Current
Funding Level (CFL) to
amount of accepted
actual disbursements
G5 transfers funds
to school’s federal
funds account
School transfers
funds from federal
funds account to
operating account
School requests
funds from G5 for
transfer to school’s
bank
School funds actual
disbursements to
student accounts
COD sends CFL
amount to G5. G5
raises
Authorization to
match CFL
Prior-Year Recoveries
•
Previously disbursed funds that are subsequently
recovered by institution
•
Funds must be returned to the proper award number via
G5
Prior-Year Charges
•
Allowed for prior award year charges for a total of $200 or
less:
− Obtain voluntary student authorization
− Determine
that payment will not prevent student from
paying current educational expenses – institutional
and non-institutional
− Prior
semester charges within same award year are
not considered prior-year balances
Unprocessed Deobligations
•
Occurs routinely when FA administrators submit
decreases to disbursement records and the Business
Office has not submitted cash refunds to G5
•
Resolution can be accomplished by
− refunding amount of unprocessed deobligation;
− submitting disbursement records that cover amount of
unprocessed deobligation; or
− making an electronic adjustment in G5.
System-Generated Adjustments
•
Pell Grant authorization adjustments may be systemgenerated, as result of negative pending amount or
potential overaward project (POP)
•
If a school does not make an adjustment within 30 days,
COD:
− reduces the disbursement with the highest
disbursement
− reduces all disbursements
Reconciliation
Institutions must reconcile internal accounting records
against:
•G5
•Pell
Year To Date (YTD)
•DL School Account Statement (SAS)
•COD
•FISAP
•Federal program’s bank statements
Reconciliation
Match school records with the Department’s records:
•Fulfills
a responsibility to safeguard federal funds
•Ensures
funds are used as intended
•Contributes
to the integrity of Title IV programs
Monthly Reconciliation
•
Monthly reconciliation is required for Campus-Based and
DL programs
•
Monthly reconciliation is recommended for all other Title
IV aid programs
•
Outstanding discrepancies must be resolved
Pell and Direct Loan Reconciliation
1.
Match the records of awards and disbursements
maintained by the Financial Aid Office and Business
Office.
2.
Match disbursements posted by the Business Office to
those records on the COD system.
3.
Match cumulative school, COD records, and net draws
in G5 for the Pell Grant and DL programs for the award
year.
COD Reports
•
Schools may reconcile Net Accepted and Posted
Disbursements in the COD system using these tools:
•
Reconciliation File or Report
• Year-to-Date (YTD) Record
• COD Pending Disbursement List
• COD Electronic Statement of Account (ESOA)
•
School receives School Account Statement (SAS) for
Direct Loans
Summary of Reconciliation Activities
•
Identify, monitor, and resolve monthly differences and
discrepancies caused by rejected records
•
Document monthly reconciliation efforts and unfinished
processing issues
•
Justify programs’ monthly ending cash balances
•
Use all available internal and external reports
Reconciliation
So What’s the Problem??
Reconciliation Issues
•
Business Office failed to tell FA Office about a R2T4
calculation
•
FA Office cancelled a Pell Grant when student did not
attend classes and Business Office was not informed
•
Potential Overaward Project (POP)
•
FA Office failed to tell Business Office about reduction
of a Pell Grant
Campus Based Programs
Information
and
Additional Fiscal
Information
58
Transfer of Funds
•
Funds may be transferred between certain CampusBased programs
•
FWS/FSEOG funds may be carried back to previous
award year or forward to next year
•
Report all transfers on the FISAP
If a school transfers FWS funds to the FSEOG Program, any
unexpended funds must be transferred back to the FWS
Program at the end of the award year.
Transfer of Funds
•
FSEOG funds may not be transferred to another
Campus Based program
•
Up to 25% of the school’s FWS allocation and
25% of Federal Perkins FCC may be transferred
to FSEOG
− 25%
maximum based on school’s current award year
allocation
− Includes
the initial and supplemental FWS allocation
Transfer of Funds
Transferring Funds
Between CampusBased Programs
Note that funds may not be
transferred from the FSEOG
Program, or to the Perkins
Loan Program.
Federal Supplemental
Educational Opportunity
Grant (FSEOG)
Carry Forward Provisions
•
School may disburse up to 10% of current year FWS and
FSEOG allocation in following award years
•
Funds carried forward must be expended before
disbursing funds from the current award year allocation
Reporting Carry Forward/Back
Report FWS and FSEOG funds carried forward and back
Example:
If a school carried forward 10% of its FWS 12-13
allocation to be spent in 13-14, the school must report
the amount on the FISAP that was due no later than
10/01/13 in Part V of the Fiscal Operations Report for
12-13.
Campus-Based Program Closeout
•
Reconcile school's authorized award with amount
reported as expended on school's FISAP
•
Amount appears in G5 as expended amount for award
year
•
ED determines the closeout amounts based on actual net
disbursements reported by a school
Issues in Campus-Based Programs
Management and Accounting
•
Allocation
•
Release and Reallocation
•
Institutional Match
•
Administrative Cost Allowance (ACA)
•
Transferring Funds
Issues in Campus-Based Programs
Management and Accounting
•
Carry Forward/Back
•
Accounting Issues
•
G5 Closeout
•
Record Keeping
•
Program Integrity
Campus-Based Allocation
•
ED allocates funds directly to schools yearly for each
program
•
Amount is based on FISAP submitted prior year
•
Unused funds are deobligated
− If greater than 10% returned, allocation will be reduced
the next year
Administrative Cost Allowance (ACA)
•
ACA is calculated on the full amount of the CampusBased awards
•
Calculation for Perkins, FWS and FSEOG
− 5% of the first $2.75M under CB programs
− 4% greater than $2.75M, but less than $5.5M
− 3% greater than $5.5M
Determining Closeout Amounts
Negative G5 Balance
•
Negative amount will appear in G5 available balance line,
if school's fiscal office drew down more money than
reported as expended on FISAP
•
Business Office must refund the amount or perform a
drawdown adjustment
•
School amends FISAP to show proper amount expended
equal to amount drawn
Closeout Notification
•
ED notifies school by email if decrease was applied to
Campus-Based awards through close out process
•
School may correct FISAP through eCB website, if prior
year report was incorrect and needs adjustment
− Contact the Campus-Based Call Center after correction
Acceptable Record Formats
•
Hardcopy
•
Microform
•
Computer file
•
Optical disk
•
CD-ROM
•
Other media formats
Wrap Up: Objectives
•
Explain the role of Fiscal Officers in Title IV program
administration
•
Outline institutional fiscal responsibilities
•
Identify internal control functions of eligible and
participating institutions
•
Discuss resolution of conflicting information
School Responsibilities For
Program Integrity
• Eligibility for and administration of Title IV
aid is an institutional responsibility
• Must involve all major offices, not just
financial aid (academics, admissions,
business, placement, registrar, student
affairs, etc)
74
School Responsibilities For
Program Integrity
• Standard of Conduct - Fiduciary Duty: Schools
participating in the Title IV programs act as a
fiduciary of Title IV funds
– Schools must act with the competency and integrity to
qualify as a fiduciary
– A fiduciary is subject to the highest standards of care
and diligence in administering the programs and in
accounting for the funds received
• Also applies to third-party servicer
• Failure to act as a fiduciary can lead to termination
from participation, or other administrative action
75
School Responsibilities For
Program Integrity
• Use of Funds: A participating institution is
a trustee of federal funds
– Schools may not use Title IV funds for any
other than their intended purposes
– Schools may not hypothecate (i.e. use as
collateral) Title IV funds for any purpose
76
Account Records and Program
Integrity
• Institutions must maintain, on a current basis,
financial records that reflect all Title IV
program transactions
• General ledger control accounts and related
subsidiary accounts must identify all program
transactions and separate those transactions
from other financial activity
• Pell and Direct Loan accounting records must
be reconciled monthly
77
Recordkeeping and Program
Integrity
• Institutions shall maintain required records in a
systematically organized manner
• Records may be retained in hard copy or in
electronic media formats as long as –
– Records can be retrievable in hard copy format
– The ISIR must be retained in the format in which it
was received
• Most records must be retained for 3 years after
the end of the year in which they were created
– Some records have longer retention requirements
78
How Your School Contributes
to Program Integrity
• Establish strong controls
• Establish written policies and procedures
and implement them
Click
Here!!
79
– “A Guide to Creating Policies and Procedures”
on FSA Assessments
– http://www.ifap.ed.gov/qahome/qaassessment
s/makingofapandpmanual.html
How Your School Contributes
to Program Integrity
• Maintain well-trained staff
– All ED/FSA training is offered free of charge!
Click
Here!!
Click
Here!!
80
– http://www2.ed.gov/offices/OSFAP/training/index.html
• Provide required equipment and electronic
access
– see Get Ready to Participate Electronically
– Automation section of FSA Assessments,
http://www.ifap.ed.gov/qahome/qaassessments/automation.html
How Your School Contributes
to Program Integrity
• Ensure that issues identified in audits and
reviews get corrected
– Ask for technical assistance from your School
Participation Division
• Conduct institutional self-assessments
Click
Here!!
81
– FSA Assessments’ Management
Enhancement Worksheets,
http://www.ifap.ed.gov/qahome/mgtenhancementwk.html
QUESTIONS?
CONTACT INFORMATION:
Nautochia Webb 646-428-3758
Nautochia.Webb@ed.gov
Customer Service: FSA is committed to providing the
best possible customer service. Help us, help you!
Please provide any feedback on this training at:
http://s.zoomerang.com/s/Nautochia_Webb_Workshop
Feedback on Training can also be shared with:
Annmarie Weisman, Eastern Region Supervisor
Annmarie.Weisman@ed.gov