Federal Grants Management in Education Programs

The Omni Circular: What You Need to Know to Administer a 21stCentury Education Program New York State Education Department October 8, 2014 Presented by Michael Brustein, Esq. mbrustein@bruman.com Brustein & Manasevit, PLLC www.bruman.com

The Major Themes Impacting Federal Grants Management 2 1. FOCUS ON OUTCOMES 2. PERFORMANCE METRICS 3. RISK ASSESSMENTS 4. FINANCIAL MANAGEMENT POLICIES 5. EQUIPMENT USE 6. MICRO PURCHASES 7. CORRECTIVE ACTION 8. FAMILY FRIENDLY POLICIES 9. FALSE CLAIMS CERTIFICATIONS 10.AUDIT THRESHOLDS

Key Dates: 3 Dec 26, 2013 http://www.gpo.gov/fdsys/pkg/FR-2013-12- 26/pdf/2013-30465.pdf June 26, 2014 August 29, 2014 Dec 26, 2014 Federal Register ED Draft EDGAR Changes COFAR Releases FAQ Final EDGAR Published

Date of Applicability of Revised Rules 4 OMB stated on 12/20/13 after December 26, 2014 All Drawdowns, ? ? ?

What is covered? 5 A-102 Administrative Rules State / Local Part 80 EDGAR A-110 Administrative Rules Postsecondary Part 74 EDGAR A-87 Cost Rules State / Local A-21 Cost Rules Rules Postsecondary A-122 Cost Rules Nonprofit A-133 Audit Rules (>$750,000)

Who is covered? 6 All nonfederal entities expending federal awards

Reasons for the Change? 7 1. Simplicity 2. Consistency 3. Obama Executive Order on Regulatory Review Increase Efficiency Strengthen Oversight

Structure of Omni-Circular (p. 78608) 8 2 CFR PART 200

(p. 78608) 9 Subpart A Definitions Subpart B General Provisions Subpart C Pre Award Requirements Subpart D Post Award Requirements Subpart E Cost Principles Subpart F Audit Requirements

Key Definitions 10 Cognizant Agency for Audit 200.18 (78611) Cognizant Agency for Indirect 200.19 (78611) Computing Devices 200.20 (78612) Cooperative Audit Resolution 200.25 (78612) Cost Objective 200.28 (78612)

11 Internal Control Over Compliance 200.62 (78615) Major Program 200.65 (78615) Micro Purchase 200.67 (78615) Modified Total Direct Cost 200.68 (78615) Non-Federal Entity 200.69 (78615)

12 Conflict of Interest 200.112 (78621)

13 Mandatory Disclosures 200.113 (78621)

Financial Management Controls The Key Component to Federal Grants

Quick Overview of New Financial Management Requirements: 15 Performance Metrics 1. 2. Risk Management 3. Augmented Pass-Through Responsibilities 4. Emphasis on Immediate Corrective Action 5. Cooperative Audit Resolution

WHY?? 16 All oversight will examine financial management controls: 1) OIG Audit 2) Single Audit 3) Federal Program Monitoring 4) Pass Through Monitoring

17 New Risk Assessment Will be Based on Financial Management Controls

18 The more attention paid to financial management controls, fewer headaches down the road!!!

Crosswork Between 34 CFR 80.20 (b) and CFR 200.302(b) 19 34 CFR 80.20 (b) 2 CFR 200.302 (b) 1. Identification of Awards 2. Financial Reporting 3. Accounting Records (Source Docs) 4. Internal Control 5. Budget Control 6. Written Cash Management Procedures 7. Written Allowability Procedures 1. Financial Reporting 2. Accounting Records 3. Internal Control 4. Budget Control 5. Allowable Cost 6. Source Documentation 7. Cash Management

1) Identification of Awards (New) 20 All federal awards received and expended The name of the federal program Identification # of award CFDA Title and Number Federal Award I.D. # Fiscal Year of Award Federal Agency Pass-Through (If S/A)

2) Financial Reporting 21 New shift to OMB approved performance metrics

2) Financial Reporting (cont.) 22 Accurate, current, complete disclosure of financial results of each award (Old) in accord with the financial reporting requirements of the grant (New) in accord with 200.327 and 200.328 200.327 Federal awarding agency can only collect OMB approved data elements, no less than annually, no more than quarterly 200.328 Non federal entity must submit performance reports at intervals required by federal agency or pass through. Annual performance reports due 90 days after reporting period; Quarterly performance reports due 30 days after reporting period

2) Financial Reporting (cont.) 23 Performance Metrics: 1. Compare actual accomplishments to objectives. (quantify to extent possible) 2. Reasons goals were not met if appropriate 3. Additional pertinent information (e.g. analysis and explanation of cost overruns, high unit costs)

2) Financial Reporting (cont.) 24 4. Significant developments a. Problems, delays. Adverse conditions that would impair ability to meet objective of the award b. Favorable developments. Finishing sooner or at less cost

2) Financial Reporting (Cont.) 25 OMB Allows ED to waive performance metrics not required. How will ED reconcile performance metrics with accountability / performance indicators of ESEA, IDEA, CTE, AEFLA

3) Accounting Records (Source Documentation) 26 Combines 80.20 (b)(2) and 80.20 (b)(6) Source Documentation on: Federal Awards Authorizations Obligations Unobligated balances Assets Expenditures Income Interest (New) Eliminated liabilities 1. 2. 3. 4. 5. 6. 7. 8.

4) Internal Control 27 Essentially same as 80.20 (b) (3) Effective control over and accountability for: 1. All funds 2. Property 3. Other assets Must adequately safeguard all assets Use assets solely for authorized purpose

4) Internal Control 200.303 (cont.) 28 Cross reference 200.303 (New) Internal controls should be in compliance with Comptroller General s Standard for Internal Control Integrated Framework and Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission

4) Internal Control 200.303 (cont.) 29 Comply with federal statutes, regs, terms of the award Evaluate and monitor compliance Take prompt action when instances of noncompliance are identified Safeguard protected personally identifiable information

5) Budget Control 30 Same as 80.20 (b)(4) Comparison of expenditures with budget amounts for each award

6) Written Cash Management Procedures (New) 31 Written Procedures to implement the requirements of 200.305

6) Written Cash Management Procedures (cont.) 32 For states, payments are governed by Treasury State CMIA agreements 31 CFR Part 205 No Change

6) Written Cash Management Procedures (cont.) 33 For all other non federal entities, payments must minimize time elapsing between draw from G-5 and disbursement (not obligation)

6) Written Cash Management Procedures (cont.) 34 Written procedures must describe whether non- federal entity uses: Advance Payments (preferred) Limited to minimum amounts needed to meet immediate cash needs Reimbursement Pass through must make payment within 30 calendar days after receipt of the billing Working Capital Advance The pass through determines that the nonfederal entity lacks sufficient working capital. Allows advance payment to cover estimated disbursement needs for initial period 1) 2) 3)

6) Written Cash Management Procedures (cont.) 35 Non federal entity must use existing resources before requesting an advance: program income, refunds, rebates, interest earned

6) Written Cash Management Procedures (cont.) 36 For all other non federal entities, payments must minimize time elapsing between draw from G-5 and disbursement (not obligation).

6) Written Cash Management Procedures (cont.) 37 Payments must not be withheld from nonfederal entities unless finding of noncompliance debt to the U.S. (Treasury Offset Program), or nonfederal entity is withholding payment to a vendor to assure satisfactory completion of work

6) Written Cash Management Procedures (cont.) 38 Advances must be maintained in insured accounts Pass through cannot require separate depository accounts Accounts must be interest bearing unless: 1. Aggregate federal awards under $120,000 2. Account not expected to earn in excess of $500 per year 3. Bank require minimum balance so high, that such account not feasible

6) Written Cash Management Procedures (cont.) 39 Interest earned must be remitted annually to HHS Interest amounts up to $500 may be retained by non federal entity for administrative purposes

7) Written Allowability Procedures (New) 40 Written procedures for determining allowability of costs in accord with Subpart E Cost Principles (see p. 78639 78662)

7) Written Allowability Procedures (Cont.) 41 Not a restatement of Subpart E But a GPS through grant development and budget process Training tool for employees

42 Payment 200.305 (78625)

43 Program Income 200.307 (78627)

44 Revision of Budget and Program Plans 200.308 (78628)

45 Period of Performance 200.309 (78629) Compare to EDGAR 34 CFR 76.708

46 Insurance Coverage 200.311 (78629) Compare to 34 CFR 76.708

47 Equipment 200.313 (78629) Significant changes on use and disposition

48 Supplies 200.314 (78630) Covers computers

Procurement Bear Claw 49

50 Contract vs. Grant 200.330 Note the difference!!