2013 Grants Management 101 WASBO Conference 5/3/13

1. 2013 Grants Management 101 WASBO Conference 5/3/13 Presented by OSPI:Daniel Lunghofer, MPA and Jennifer Carrougher

3. 8:00 am 10:00 am

4. Overview of Today’s Workshop Federal Laws and Regulations What they are and where to find them • Administrative Regulations (EDGAR Part 80) • OMB Circulars • Non-Regulatory Guidance • OSPI Bulletins Cross-Cutting Federal Fiscal Requirements Audit Requirements Other Resources

5. Federal Laws and RegulationsHierarchy

6. Federal Laws and Regulations

7. Federal Laws and Regulations

8. Federal Laws and Regulations

9. Federal Laws and Regulations

10. Federal Laws and Regulations

11. EDGAR • EDGAR Part 76 • 34 CFR PART 76 – STATE-ADMINISTERED PROGRAMS • EDGAR Part 80 • 34 CFR PART 80—UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS

12. Allowable Costs (A-87) OMB Circular A-87 (codified as 2 CFR 225) – Cost Principles for State, Local and Indian Tribal Governments • Establishes the standards for determining allowable direct and indirect costs that can be charged to federal programs • Direct Costs: Can be directly associated to a particular program • Indirect Costs: Benefit multiple programs and cannot easily be associated with a particular program

13. Allowable Costs (A-87) To be allowable under federal awards, costs must meet the following general criteria: • Be necessary and reasonable for the performance of the program • Be allocable to federal programs: In other words “To what extent are the expenditures benefitting the program being charged?” • Be authorized (or not prohibited) under state or local laws • Conform to any limitations in A-87 or other governing regulations as to the type and amount of cost items

14. Allowable Costs (A-87) • Be consistent with policies, regulations and procedures that apply uniformly to other nonfederal activities • Be accorded consistent treatment • Be determined in accordance with generally accepted accounting principles • Not be included as a cost of any other federal program (unless specifically allowed by federal law/regulation) • Be net of all applicable credits • Be adequately documented

15. Allowable Costs (A-87) Indirect Costs • Common examples are accounting (including payroll and purchasing), data processing, and human resources. • Districts are entitled to charge their calculated share of indirect costs to applicable programs (with some exceptions like administrative caps). • Calculated by School Apportionment and Financial Services and posted on their website. They are also uploaded in iGrants. • When charged, they become part of the district’s general operating revenue and there is no additional accountability for those funds from a federal perspective.

16. Allowable Costs (A-87) There are separate calculations for federal restricted, federal unrestricted. In addition, some programs and/or entities use a fixed rate percentage. Restricted rates, which are the most common, are used for programs that contain a supplanting provision Unrestricted rates, on the other hand, are for those programs without a supplanting provision Fixed rates are used by ESD’s, colleges, and in some cases, may be used for programs that have a cap on administrative costs

17. Allowable Costs (A-87) • Exceptions to OMB Circular A-87 • If a program is exempted from A-87 or any other OMB Circular, it will be noted in the CFDA for that program

18. Cash Management Cash Management requirements are in place to minimize the time that lapses between the disbursement of federal funds and the receipt of those funds. • Reimbursement Basis – low risk • The time that lapses should not be longer than 3 days (general rule)

19. Cash Management Some issues to consider: • Transfer of funds out of federal programs • Claim for reimbursement of expenditures must reconcile to your accounting system • Advances

20. Program Income • Program Income is gross income generated by a grant supported activity or earned only as a result of the grant agreement, less costs incurred as a result of the activity. • Generally, shall be deducted from total allowable costs prior to claiming for reimbursement. • If it not anticipated at the time of award shall be used to reduce federal contributions, rather than to increase the funds committed to the project. • Only if specifically authorized, program income may be added to the funds committed to the grant and may be used for cost sharing/matching.

21. Program Income Some typical examples of activities that may generate program income: • Registration for a conference funded by federal dollars • Item or service generated in a CTE class and sold for profit

22. Equipment/Real Property Management EDGAR 80.32 • Definition of Equipment: Tangible, nonexpendable personal property that has a useful life of more than one year and an acquisition cost of $5,000 or more • Districts should follow state and local procedures for use, management and disposal of equipment purchased with federal funds

23. Equipment/Real Property Management • Must have a system in place to ensure safeguards are in place to prevent loss, damage or theft • Must take physical inventory of equipment at least every two years and reconcile to property records • Must ensure adequate maintenance procedures are in place to keep equipment purchased with federal funds in good condition

24. Equipment/Real Property Management Elements that must be included in the districts property records for each item of property purchased with federal funds: • Description • Serial number or other identification number • Source • Who holds title • The acquisition date and cost • The percentage of cost paid for with federal funds • The location, use and condition of the property • Disposition data, including date and sale price

25. Equipment/Real Property Management • Small and attractive items • Items that are below the threshold for requiring formal tracking, but are easily susceptible to theft or damage • Should ensure a formal system of tracking these items

26. Equipment/Real Property Management Disposition of Equipment • Can use the equipment for another program that is currently, or was previously, funded with federal funds (record transfer in property records) • If not transferring to another program: • If FMV < $5,000, can keep with no further obligation to federal government • If FMV > $5,000, must pay the federal government a share based on a percentage of the federal participation in the initial acquisition

27. Equipment/Real Property Management Supplies • Any tangible property not considered equipment • Do not have to be recorded in property records or have a physical inventory • Disposition: Use same thresholds as equipment and value in the aggregate

28. Matching Matching (also known as cost sharing) is a requirement to provide contributions of a certain amount to match Federal awards. Some federal programs require that a district provide matching funds in order to receive the federal funds. The following criteria should be considered when determining whether an expenditure is an acceptable match: • Must be able to be verified from the districts records • Cannot be included as contributions for other federal programs (unless specifically allowed by Federal program laws and regulations)

29. Matching • Must be able to show how it is necessary and reasonable to the accomplishment of the program objectives • Must be allowable under applicable cost principles • Must not be federal funds from another program (unless specifically authorized by federal statute) • Must be included in the approved budget when required • Must conform to other provisions of A-102 (common rule) and laws, regulations, and provisions of contract or grant agreements applicable to the program

30. Supplanting Requires federal funds be used to supplement the amount of funds available from nonfederal sources. Therefore, you cannot use federal funds to supplant nonfederal funds that would have been used regardless of whether the federal funds were available or not. In other words, “Would the activity that the federal funds were used for have occurred whether or not the federal funds were available?”

31. Supplanting Three scenarios for supplanting are when the district uses federal funds to provide services: • Required to be provided for with other funds. • That were provided with nonfederal funds in the prior year. • For participating children when the district provides the same services with nonfederal funds for nonparticipating children.

32. Supplanting Rebutting the presumption of supplanting • The district must be able to demonstrate that it would not have provided the services in question with nonfederal funds if the federal funds had not been available. • Documentation of budget discussions/decisions is extremely important • School Board Minutes • Itemized Budget Documents

33. Maintenance of Effort (MOE) • Districts must demonstrate that the level of state and local funding remains relatively constant from year to year. • A district must meet maintenance of effort requirements under certain programs. If a district is found to fail the MOE test, their subsequent years grant award will be reduced by the amount of failure.

34. Maintenance of Effort (MOE) Cross-Cutting MOE • The MOE calculation is performed by School Apportionment and Financial Services (SAFS) at OSPI using a district’s F-196 financial information. • Determines whether the combined fiscal effort per student or the aggregate expenditures of the district from State and local funds for free public education for the preceding year was not less than 90 percent of the combined fiscal effort or aggregate expenditures for the second preceding year, unless specifically waived by the Department of Education. • The cross-cutting MOE test is generally completed and issued in January of each year.

35. Maintenance of Effort (MOE) Effects of Failing MOE • The district can see some federal allocations reduced by the percentage amount the district failed MOE. • The subsequent year’s MOE test is performed against the amount the district would have needed to pass in that year, not the amount of the prior year test.

36. Maintenance of Effort (MOE) Special Education MOE • Also calculated by SAFS based on F-196 data. • Determines whether a district spent an amount of local funds, or a combination of State and local funds, for the education of children with disabilities that is at least equal, on either an aggregate or per capita basis, to the amount of local funds, or a combination of State and local funds, expended for this purpose by the district in the prior fiscal year. • If a district relies on a local test to pass, OSPI is required to look back at the last fiscal year the district relied on local resources and compare against that year.

37. Maintenance of Effort (MOE) • One major difference with Special Education MOE is the 50% provision. For any fiscal year that a district’s allocation of special education funds exceeds the allocation for the previous fiscal year, the district may reduce the level of local or State and local expenditures by up to 50% of the excess. • If a district chooses this option, it must use an amount of local funds equal to the reduction for activities authorized under ESEA.

38. Maintenance of Effort (MOE) Special Ed MOE Continued Districts that fail the initial test will receive a letter from SAFS notifying them of the process for submitting additional documentation for review by the OSPI Special Education department. The exceptions considered during this review process are: • The voluntary departure, by retirement or otherwise, of special education staff • A decrease in the enrollment of children with disabilities, • The termination of the obligation to serve an exceptionally costly program for a particular child with a disability • The termination of costly expenditures for long-term purchases • The assumption of costs by the state safety net fund The special education MOE test is generally completed and issued in February of each year.

39. Earmarking/Set-Asides This requirement establishes minimum and/or maximum amount or percentage of the program’s funding that must/may be used for specified activities. Important considerations: • You should account for earmarking/set-asides separately (sub-code) so that you can show they were used for only allowable activities

40. Earmarking/Set-Asides Important considerations (continued): • If expenditures for employee compensation are used to satisfy a set-aside requirement, appropriate time and effort reporting must be maintained • For districts in school improvement, there are different set-asides for professional development at the building and district levels which need to be tracked and accounted for separately • OSPI Bulletin 076-11 provides additional guidance/specific program set-asides at http://www.k12.wa.us/BulletinsMemos/bulletins2011/B076-11.doc

41. Period of Availability Federal awards contain a specified period of time that funds are available: • Generally 15 months (July 1 through September 30 of succeeding year) • 12 month additional period that allowable carryover funds may be obligated (Tydings Period) Exception to Tydings: Direct grants to districts from ED – the funding period is stated in the award notification and no additional 12 months applies – flexibility to extend without prior department approval if you meet criteria (see EDGAR part 75)

42. Period of Availability Limitations on Carryover Generally carryover is eligible for the additional 12 months. Exceptions are: • Title I, Part A (CFDA 84.010) – district that receive in excess of $50,000 are limited to a 15% carryover (a waiver may be obtained once every three years (see Non-reg guidance: fiscal issues) – (OSPI requested waiver) • Career and Technical Education (CFDA 84.048) – carryover is returned to the state for reallocation

43. Period of Availability When are funds initially available to spend? Formula Grant: • When the district submits a “substantially approvable” application (except special edwhich requires a fully completed application) • When the state can begin obligating the funds (generally July 1) Competitive Grant: • Competitive grants can include pre-award costs with prior OSPI approval, so generally the funds are available as of July 1 of each year

44. Period of Availability • 2013 SAS Timeline for Grant Administration Process for Federal Formula Grants • REAP; Special Education; Title I, A & C; Title II, A; and Carl Perkins

45. Period of Availability 2013 SAS Timeline for Grant Administration Process for Federal Formula Grants REAP; Special Education; Title I, A & C; Title II, A; and Carl Perkins

46. Period of Availability Obligation of Funds An obligation occurs when the district has entered into a binding commitment to pay out federal funds. When an obligation occurs depends on the type of activity the funds are being used for. The following table shows when an obligation is made:

47. Procurement • Federal procurement regulations apply to obtaining supplies, equipment, services, and construction under federal programs. • Districts will use their own procurement procedures (purchasing processes) that include applicable state and local laws and regulations as long as they conform to federal laws and standards.

48. Procurement • There are different allowable methods of procuring goods/services: • Small purchases (informal) - These are purchases less than $100,000 • Competitive sealed bids (formal advertising) – over $100,000

49. Procurement Washington State Laws for purchases of furniture, equipment or supplies are found in RCW 28A.335.190, which requires competitive basis for items over $40,000 and formal bid process for items over $70,000. Since the state thresholds are less than the federal, you must use the state when procuring furniture, equipment and supplies (except books) with federal funds.

50. Suspension/Debarment Districts are prohibited from contracting with, or making subawards under covered transactions to, parties that are suspended or debarred or whose principals are suspended or debarred. Covered transactions include: • Procurement contracts for goods and services over $25,000 • Subawards (regardless of amount)