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CASH MANAGEMENT
NYSFAAADate
Nautochia WebbU.S. Department of Education
Training & Information Services Division
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Financial Responsibility Standards
All schools must meet general standards and past performance
standards
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Financial ResponsibilityGeneral StandardsPublic 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
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Financial ResponsibilityGeneral Standards
Proprietary or Private Nonprofit Institutions
Composite score of at least 1.5Sufficient cash reserves to make required returns of Title IV fundsSchool is current in its debt payments, andSchool is meeting all of its financial obligationsAudited financial statements do NOT express doubt about continued existence of school (e.g., “going concern” or an adverse, qualified or disclaimed opinion)
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Composite Score Calculation (example: Proprietary Institution)
Step 1: Calculate the ratios
Step 2: Calculate strength factor score
Step 3: Calculate weighted score
Primary Reserve=.08
.08x20= 1.600
1.600x30%= 0.480
Equity Ratio= 0.332
.332x6= 1.992
1.992x40%= 0.797
Net Income Ratio = 0.051
[.051x33.3]+1 = 2.698
2.698x30% = 0.809
Step 4: Add the weighted scores and round to one digit after decimal point 2.086 = 2.1
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Composite Score ScaleScore
3.0
1.5
Passed Financial Responsibility Standards - No Requirements
1.4
1.0
With Conditions – Cash Monitoring or Reimbursement Based on School Participation Division Risk AssessmentOPTIONS:(1) CM Level 1(2) CM Level 2(3) Reimbursement and/or other reporting as required by School Participation Division
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-1.0
Failed Financial Responsibility StandardsOPTIONS:(1) Post a Minimum 50% Letter of Credit (LOC)(2) Provisional Certification - minimum 10% LOC and cash monitoring level 1 or 2, or reimbursement
PASS
ZONE
FAIL
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Refund Cash Reserve StandardsSchool is considered to have sufficient cash reserves if it meets one of the following:
Satisfies the requirements of a public schoolIs located in a state that has a tuition recovery fund approved by the Department and the school contributes to the fund, orDemonstrates that it makes its Returns to Title IV Funds in a timely manner
Timely Refund Standard
School demonstrates it makes refunds timely if fewer than 5% of required refunds sampled in audit or program review were late
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Timely Return of Title IV FundsSchool must perform calculation within 30 calendar days of date that school determines student is a withdrawalSchool 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
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Return of Title IV Funds
Statutory formula that determines amount of Title IV aid a student has earned during his/her period attendanceApplies to any Title IV student who begins attendance and then completely withdraws, or otherwise ceases attendance
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Return of Title IV Funds
Student earns Title IV through attendancePercentage 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 programsscheduled clock hours in clock hour programs
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Return of Title IV Funds
School is responsible to return Title IV funds disbursed, but not earned by student
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Financial Responsibility and Current in Debt Payments
A school is not current in its debt payments ifIt is in violation of any existing loan agreement at its fiscal year end, orFails 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
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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 DepartmentIn 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
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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 requiredHas failed to resolve any compliance issues identified in program reviews or audits
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Proprietary Schools and the 90/10 Rule
May derive no more than 90% of its revenues from the Title IV federal student aid programs10% of revenue must come from non-Title IV funding
Tuition, fees, other institutional charges, school activities necessary for students enrolled in those programs
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Proprietary Schools and the 90/10 Rule
Must calculate using the cash basis of accountingMust report as a footnote in annual financial statementsSee 34 CFR 668.14(b)(16) and 34 CFR 668.28
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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
÷
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Campus Based Programs Information
and Additional Fiscal
Information
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Campus-Based Administrative Cost Allowance (ACA)
Use to defray costs of administering the programSchool must request and draw downACA is based on Campus-Based expenditures (federal plus nonfederal) for the award year
FSEOG funds disbursed to studentsFWS gross wages paid to studentsPerkins Loans advanced to students
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Campus-Based Requirements
Application processMark programs on PPA (new school)Complete FISAP by October 1, 2012
Application for 2013-2014Report for 2011-2012
Matching requirementsOther uses of funds
Get Ready – Fiscal Obligations
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Campus BasedMatching Requirements
General ruleFederal share may not exceed 75% of FSEOG, FWS or Perkins expenditures
Automatic waivers of FSEOG and FWS matches for Titles III and V institutionsSpecific FWS federal match waivers
Get Ready – Fiscal Obligations
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FSEOG Match
Nonfederal matchInstitutional grants and scholarshipsTuition or fee waiversState scholarshipsFoundation or other charitable organization fundsVarious methods for matching
Federal allocation may not exceed 75% of total awards made
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FWS Match
Nonfederal match may be noncashPrivate nonprofit organization or federal, state, or local public agency employer
Up to 90% federal for up to 10% of studentsPrivate for-profit employer
Minimum 50% nonfederal match
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FWS Automatic Match Waivers
If work performed by student is for the institution, a public agency or a private nonprofit organization, ANDStudent is a reading tutor, math tutor and/or performing family literacy activities, THENFunds used to pay students may be 100% federal funds
Get Ready – Fiscal Obligations
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FWS Community Service Requirements
School must use 7% of total allocation for community service employmentMust include one reading tutor project or family literacy project
Get Ready – Fiscal Obligations
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Pell Administrative Cost Allowance
Use to defray costs of administering the programFunds 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
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 Reporting-Immediate 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 – • 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
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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
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Managing Federal Funds
• Schools must not request funds that exceed their immediate need for those funds• Funds received from G5 must be disbursed to students within three
business days of receipt
• Excess Cash• Any amount of Title IV funds not disbursed to students by the end of
the third business day after receipt
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Funding Basics
• 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
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Pell Current Funding Level (CFL)
• 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
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Direct Loan Current Funding Level
• 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
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
COD sends CFL amount to G5. G5 raises Authorization to match CFL
School requests funds from G5 for transfer to school’s bank
G5 transfers funds to school’s federal funds account
School transfers funds from federal funds account to operating account
School funds actual disbursements to student accounts
Funding Process
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 system- generated, 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
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Campus Based Programs Information
and Additional Fiscal
Information
Transfer of Funds• Funds may be transferred between certain Campus-
Based 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
Federal Supplemental Educational Opportunity Grant (FSEOG)Note that funds may not be
transferred from the FSEOG Program, or to the Perkins Loan Program.
Transferring Funds Between Campus-Based Programs
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 Campus-Based 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
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School Responsibilities For Program Integrity
Eligibility for and administration of Title IV aid is an institutional responsibilityMust involve all major offices, not just financial aid (academics, admissions, business, placement, registrar, student affairs, etc)
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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 fiduciaryA 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 servicerFailure to act as a fiduciary can lead to termination from participation, or other administrative action
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School Responsibilities For Program Integrity
Use of Funds: A participating institution is a trustee of federal fundsSchools may not use Title IV funds for any other than their intended purposesSchools may not hypothecate (i.e. use as collateral) Title IV funds for any purpose
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Account Records and Program Integrity
Institutions must maintain, on a current basis, financial records that reflect all Title IV program transactionsGeneral ledger control accounts and related subsidiary accounts must identify all program transactions and separate those transactions from other financial activityPell and Direct Loan accounting records must be reconciled monthly
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Recordkeeping and Program Integrity
Institutions shall maintain required records in a systematically organized mannerRecords may be retained in hard copy or in electronic media formats as long as –
Records can be retrievable in hard copy formatThe 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
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How Your School Contributesto Program Integrity
Establish strong controlsEstablish written policies and procedures and implement them
“A Guide to Creating Policies and Procedures” on FSA Assessmentshttp://www.ifap.ed.gov/qahome/qaassessments/makingofapandpmanual.html
Click Here!!
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How Your School Contributesto Program Integrity
Maintain well-trained staffAll ED/FSA training is offered free of charge!
http://www2.ed.gov/offices/OSFAP/training/index.htmlProvide required equipment and electronic access
see Get Ready to Participate ElectronicallyAutomation section of FSA Assessments,http://www.ifap.ed.gov/qahome/qaassessments/automation.html
Click Here!
!
Click Here!!
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How Your School Contributesto Program Integrity
Ensure that issues identified in audits and reviews get correctedAsk for technical assistance from your School Participation Division
Conduct institutional self-assessmentsFSA Assessments’ Management Enhancement Worksheets,
http://www.ifap.ed.gov/qahome/mgtenhancementwk.html
Click Here!!
QUESTIONS?
CONTACT INFORMATION:
Nautochia Webb [email protected]
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
