Uniform Grants Guidance

2015 ESEA Directors Institute

August 25, 2015

Consolidated Planning & Monitoring

Eve CarneyExecutive Director

Renee PalakovicDirector of Planning

Eve.Carney@tn.govRenee.Palakovic@tn.gov

Agenda

• Background on Uniform Grants Guidance

• Allowability– Basic Cost Principles– Specific Items of Cost

• Grants Management Systems– Time and Effort– Financial Management– Procurement– Records and Reviews

• Requirements of Pass-Through Entities (TDOE)

Why UGG and Why Now?

Uniform Grants Guidance: Rationale

• Simplicity

• Consistency

• Obama Executive Order on Regulatory Review Increase Efficiency Strengthen Oversight

• Why now?

Key Dates

Feb. 1, 2013 Notice of Proposed Rulemaking

Dec. 26, 2013 Grants Guidance Published Federal Registerhttp://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdf

June 26, 2014 Draft Regulations Due to OMB

Aug. 29, 2014 COFAR Releases FAQs

Dec. 26, 2014 Final Regulations Published

July 1, 2015 Uniform Grants Guidance in effect for new awards (grants awarded after Dec. 26, 2014)

Most Significant General Changes

• Auditors (A-133 + federal OIG) and Monitors (federal and State Pass-Through) must look more to “outcomes” than to “process”

• The Omni Circular has a MAJOR emphasis on “strengthening accountability” by improving policies that protect against waste, fraud and abuse Required written policies/procedures

Allowability – Cost Principles and

Items of Cost

Cost Principles: Factors Affecting Allowability

• §200.403All Costs Must Be:

1. Necessary, Reasonable, and Allocable2. In conformance with federal law and grant terms3. Consistent with state and local policies 4. Consistently treated5. In accordance with Generally Accepted Accounting

Principles (GAAP)6. Not included as match7. Net of applicable credits 8. Adequately documented

Selected Items of Cost – Conferences

• §200.432 (Updated)

Allowable conference costs include rental of facilities, costs of meals and refreshments, transportation, unless restricted by the federal award

New: Costs related to identifying, but not providing, locally available dependent-care resources

New: But 200.474 “travel” allows costs for “above and beyond regular dependent care”

Conference hosts must exercise discretion in ensuring costs are appropriate, necessary, and managed in manner than minimizes costs to federal award

Selected Items of Cost – Travel

• §200.474 (Changed)

Travel costs may be charged on actual, per diem, or mileage basis

Travel charges must be consistent with entity’s written travel reimbursement policies

Grantee must retain documentation that participation of individual in conference is necessary for the project

Travel costs must be reasonable and consistent with written travel policy / or follow GSA 48 CFR 31.205-46(a)

Selected Items of Cost – Entertainment• §200.438 (Clarified)

Costs of entertainment are unallowable Amusement, Social Activities

Exception: where costs are authorized or have prior written approval of the federal awarding agency

Time and Effort

Time and Effort Basics

• §200.430

• New Name: Time Distribution Records “Standards for Documentation of Personnel Expenses”

• If federal funds are used for salaries, then time distribution records are required

• How staff demonstrate allocability If employee paid with federal funds, then must show that the

employee worked on that specific federal program cost objective Paid in whole or in part with federal funds 200.430(i)(1) Used to meet a match/cost share requirement 200.430(i)(4)

Participants

• All employees paid in part or in full with federal funds

• Some employees paid with non-federal funds (state match)

• Part-time employees

• NOT contractors

Part 200 Cost Objective – Defined

• §200.28• What is a cost objective?

• Program, function, activity, award, organizational subdivision, contract, or work unit for which cost data are desired and for which provision is made to accumulate and measure the cost of processes, products, jobs, capital projects, etc.

What Are Not Cost Objectives

• Federal Programs• Title I, Part A• Doing my job• ESEA• Working on initiatives and programs that benefit

Students with Disabilities• Director of Federal Programs• IDEA• Educating children in classrooms

Multiple Cost Objectives

Multiple Cost Objectives §200.430(vii) include working on

More than one federal award A federal award and a non-federal award An indirect cost activity and a direct cost activity Two or more indirect activities that are allocated using

different allocation bases An unallowable activity and a direct or indirect cost activity

A-87 Standards – Current Rule

• Semi-Annual Certifications

If an employee works on a single cost objective: After the fact Account for the total

activity Signed by employee or

supervisor Every six months (at

least twice a year)

• Personnel Activity Report (PAR)

If an employee works on multiple cost objectives: After the fact Account for total activity Signed by employee Prepared at least monthly

and coincide with one or more pay periods

2 CFR Part 200 Standards – New Rule

• Charges for salaries must be based on records that accurately reflect the work performed

1. Must be supported by a system of internal controls which provides reasonable assurance charges are accurate, allowable, and properly allocated

2. Be incorporated into official records3. Reasonably reflect total activity for which employee is

compensated and not exceed 100%4. Encompass all activities (federal and non-federal)5. Comply with established accounting polices and practices6. Support distribution among specific activities or cost

objectives

New Rule – Compliance

• If records meet the standards: the non-federal entity will NOT be required to provide additional support or documentation for the work performed 200.430(i)(2)

• BUT, if “records” of grantee do not meet new standards, ED may require PARs 200.430(i)(8) PARs are not defined Questioned costs must be repaid using state/local funds

• Recommend maintaining current system of documenting personnel expenses until these new standards have been audited

Use of Budget Estimates and Percentages in Documenting Personnel Activities

• Budget estimates alone do not qualify as support for charges to federal awards §200.430(i)(1)(viii)

• May be used for interim accounting purposes if: Produces reasonable approximations Significant changes to the corresponding work activity are

identified in a timely manner Internal controls in place to review after-the-fact interim

charges based on budget estimates

• NEW: Percentages may be used for distribution of total activities §200.430(i)(1)(ix)

Reconciliation

• NEW: All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. §200.430(i)(1)(viii)(C)

• Annually, reconciliation assures allocability – charging the federal award only for the benefit received.

Example: Title I, Part A Cost Objectives

• For Title I, there are several SEA-level cost objectives: Administration Title I, Part A School Improvement (4%) Title I, Part A Statewide Program

• At the LEA level, there are additional cost objectives for Title I: parent involvement homeless equitable services district initiatives

De Minimis Benefit

• Limited work on another cost objective does not need to be captured in time and effort records.

• Employees may work 5% or less on another cost objective.

• The worked performed on these limited duties cannot deprive a benefit from the intended beneficiaries.

• EXAMPLE: A teacher works on a single cost objective but also has limited other responsibilities, such as cafeteria or bus duties. – As long as these additional responsibilities do not exceed 5%

over a twelve-month period, then the teacher can still complete a semi-annual certification (single cost objective)

Financial Management Controls:

Key Components

Internal Controls

§200.303 – Essentially same as current requirements under section 80.20(b)(3):

• Effective control over and accountability for:1. All funds2. Property3. Other assets

• Must adequately safeguard all assets• Use assets solely for authorized purpose

– New: Internal controls “should” be in compliance with:The U.S. Comptroller General’s Standard for Internal Control Integrated Framework: http://gao.gov/products/gao-14-704G

Internal Controls

• §200.303 – Internal Controls must ensure compliance with federal statutes, regulations, and terms of the award.

• Entities must: Evaluate and monitor compliance Take prompt action when instances of non-compliance are

identified; and Safeguard protected personally identifiable information

(PII)

NEW: Written Cash Management Procedures

• Written Procedures required to implement the requirements of 200.305

• Written procedures must include a description of the method the district uses (Tennessee is a reimbursement state)

• Must minimize time elapsing between reimbursement request and disbursement to comply with Cash Management Improvement Act (CMIA)

New: Written Allowability Procedures

• Written procedures required for determining allowability of costs in accordance with Subpart E – Cost Principles

• Procedures can not simply restate the Uniform Guidance Subpart E

• Should explain the process used throughout the grant development and budget process

• Someone familiar with the program requirements should be involved with the allowability determinations, and the written procedures should include this (position, not name of employee)

Subgrantee or Contractor?

Subgrantee v. Contractor

Why is the distinction important?

• Federal money spent by a subgrantees is subject to audit

• Payments to contractors are not federal awards and not subject to audit

What is a Subgrant?

• Federal law dictates what a subgrant is and when it is allowed• Therefore, subgrants are permitted when mandated by

statute!

• Subgrantees (also known as Subrecipients) must carry out responsibilities of the federal program

• SEAs and LEAs must monitor subgrantees’ compliance with all federal program and fiscal requirements

What is a Contract?

• A contract provides goods or services as needed by the program

• Contractors (also known as Vendors) are NOT responsible for carrying out the responsibilities of the federal program

• Contractors must carry out the terms of their contracts– Grantees and Subgrantees must have a contract

administration system to ensure contractors are complying with the terms of their contracts

Subgrant v. ContractHow to Distinguish the Difference

• A subgrantee:

• Determines who is eligible to participate in the federal program

• Measures performance against objectives of the federal program

• Is responsible for programmatic decision-making

• Is responsible for complying with federal program requirements

• Uses federal funds to carry out the program (not just provide specific goods/services)

• A contractor:

• Provides goods/services within normal business operations

• Provides similar goods/services to different purchasers

• Operates in a competitive environment

• Provides goods/services ancillary to operation of federal program

• Is NOT subject to compliance requirements of the federal program.

Subgrant v. Contract

• A public agency’s designation as a Contract or Subgrant is not binding– Auditors are required to use their professional judgment to

determine the true nature of a document based on the previous criteria (OMB Circular A-133 and Compliance Supplement)

• In making the determination – the substance of the relationship is more important than the form of the agreement

Financial Management Controls:

Procurement

Open Competition

• §200.319

• All procurement transactions must be conducted with full and open competition (in Tennessee over 10,000)

• T.C.A. states that the threshold of $10,000 or more for purchases. – Cumulative purposes anticipated to exceed $10,000 must be

competitively bid

• To eliminate unfair advantage, contractors that develop or draft specifications, requirements, statement of work, and invitations for bids or RFPs must be excluded from competing for such procurements

Conflict of Interest

• §200.112

• Must maintain written standard of conduct, including conflict of interest policy

• A conflict of interest arises when any of the following has a financial or other interest in the firm selected for award:

– Employee, officer, or agent– Any member of that person’s immediate family– That person’s partner– An organization which employs, or is about to employ, any of

the above or has a financial interest in the firm selected for award

Conflict of Interest

• §200.112

• NEW: All non-federal entities must establish conflict of interest policies, and disclose in writing any potential conflict to federal awarding agency in accordance with applicable federal awarding agency policy

Cost/Price Analysis

• §200.323• Must perform a cost or price analysis in connection

with every procurement action, including contract modifications

• NEW: Only required for costs in excess of the simplified acquisition threshold ($150,000)– Cost analysis generally means evaluating the separate cost

elements that make up the total price (including profit)– Price analysis generally means evaluating the total price– However, TN has a lower limit of $10,000

Vendor Selection Process

• §200.320• Methods of procurement:

1. NEW: Micro-purchase2. Small purchase procedures – N/A to Tennessee3. Competitive sealed bids4. Competitive proposals5. Non-competitive proposals

Vendor Selection Process: 1) Micro-Purchase

• §300.320(a)• NEW: Acquisition of supplies and services under

$3,000 or less

• May be awarded without soliciting competitive quotations if nonfederal entity considers the cost reasonable

• To the extent practicable must distribute micro-purchases equitably among qualified suppliers

Vendor Selection Process: 2) Small Purchase Procedures – N/A to TN

• Good or service that costs $100,000 or less (NEW: $150,000 under 200.88)

TN has a lower threshold, $10,000; therefore this procurement method is Not Applicable

• Must obtain price or rate quotes from an adequate number of qualified sources

• “Relatively simply and informal”

Vendor Selection Process: 3) Noncompetitive Proposals

• Appropriate only when:– The good or services is available only from a single source

(sole source)– There is a public emergency– The awarding agency authorizes– NEW: awarding agency or pass-through must expressly

authorize noncompetitive proposals in response to written requires from nonfederal entity - 200.320(f)(3)

– After soliciting a number of sources, competition is deemed inadequate

• Cannot contract with vendor who has been suspended or debarred: http://www.sam.gov

Contract Administration

• §200.318

• Revised: Nonfederal entities, such as TDOE, must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of the contract

– Contractors bound by terms of contract

– Important to include appropriate terms and conditions

– Manage for performance

Use and Disposition of Grant-Acquired Equipment

• §200.313• Clarification: shared use is allowed if such use will not

“interfere”: 1st preference – other projects supported by the federal

awarding agency 2nd preference – project funded by other federal agencies 3rd preference – use for non federally funded programs

• When property no longer needed, must follow disposition rules: Transfer to another federal program Over $5,000 – pay federal share Under $5,000 – no accountability

Financial Management Controls:

Records and Reviews

Methods for Collection, Transmission, and Storage of Information

• §200.335• NEW: When original records are electronic and cannot

be altered, there is no need to create and retain paper copies

• When original records are paper, electronic versions may be substituted through the use of duplication or other forms of electronic media provided they:

Are subject to periodic quality control reviews, Provide reasonable safeguards against alteration; and Remain readable

• Records should be retained 7 years from the award date

Requirements of the Pass-Through Entity

Federal awarding agency review of risk posed by applicants

• §200.205• NEW: ED and “Pass-Through” must have in place a

framework for evaluating risks before applicant receives funding

1. Financial Stability2. Quality of Management System3. History of Performance4. Audit Reports5. Applicant’s Ability to Effectively Implement Program

Federal awarding agency review of risk posed by applicants

§200.205ED or “Pass Through” May Impose “additional federal award conditions”:

Require reimbursement; Withhold funds until evidence of acceptable performance; More detailed reporting; Additional monitoring; Require grantee to obtain technical or management

assistance; or Establish additional prior approvals

Monitoring and reporting program performance

§200.328NEW: Monitoring by the “Pass Through”

• Monitor to assure compliance with applicable federal requirements and performance expectations are achieved

• Must cover each program, function or activity (see also 200.331)

• Must submit “performance reports” at least annually

Resources

• Uniform Grants Guidance: http://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdf

• COFAR: https://cfo.gov/cofar/

• OCFO Time and Effort Guidance: http://www2.ed.gov/policy/fund/guid/gposbul/time-and-effort-reporting.html

Resources

• 2 CFR 200: http://www.ecfr.gov/cgi-bin/text-idx?SID=6214841a79953f26c5c230d72d6b70a1&tpl=/ecfrbrowse/Title02/2cfr200_main_02.tpl

– FAQs: http://www2.ed.gov/policy/fund/guid/uniform-guidance/faqed.pdf

• EDGAR: http://www2.ed.gov/policy/fund/reg/edgarReg/edgar.html– Title 34, Code of Federal Regulations (CFR), Parts 75-79, 81 to

86 and 97-99. For awards made prior to 12/26/2014, EDGAR Parts 74 and 80 still apply.

– For awards made on or after 12/26/2014, 2 CFR Part 200, which includes the substance formerly in parts 74 and 80, applies.

Resources

• ePlan: https://eplan.tn.gov/ Uniform Grants Guidance Training Videos:

https://onedrive.live.com/?cid=4e040e5a9ca9cbb4&id=4E040E5A9CA9CBB4!121&Bsrc=Share&Bpub=SDX.SkyDrive&sc=Photos&authkey=!AmuTdskCXMWsAvc

NOTE: The videos are not to be used for any other purpose nor shared with anyone outside of the department or LEA.

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