Uniform Grants Guidance

1. Uniform Grants Guidance 2015 ESEA Directors Institute August 25, 2015

2. Consolidated Planning & Monitoring Eve Carney Executive Director Renee Palakovic Director of Planning Eve.Carney@tn.gov Renee.Palakovic@tn.gov

3. 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)

4. Why UGG and Why Now?

5. Uniform Grants Guidance: Rationale • Simplicity • Consistency • Obama Executive Order on Regulatory Review • Increase Efficiency • Strengthen Oversight • Why now?

6. Key Dates

7. 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

8. Allowability – Cost Principles and Items of Cost

9. Cost Principles: Factors Affecting Allowability • §200.403 All Costs Must Be: • Necessary, Reasonable, and Allocable • In conformance with federal law and grant terms • Consistent with state and local policies • Consistently treated • In accordance with Generally Accepted Accounting Principles (GAAP) • Not included as match • Net of applicable credits • Adequately documented

10. 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

11. 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)

12. 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

13. Time and Effort

14. 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)

15. 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

16. 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.

17. WhatAre 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

18. 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

19. 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

20. 2 CFR Part 200 Standards – New Rule • Charges for salaries must be based on records that accurately reflect the work performed • Must be supported by a system of internal controls which provides reasonable assurance charges are accurate, allowable, and properly allocated • Be incorporated into official records • Reasonably reflect total activity for which employee is compensated and not exceed 100% • Encompass all activities (federal and non-federal) • Comply with established accounting polices and practices • Support distribution among specific activities or cost objectives

21. 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

22. 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)

23. 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.

24. 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

25. 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)

26. Financial Management Controls: Key Components

27. Internal Controls §200.303 – Essentially same as current requirements under section 80.20(b)(3): • Effective control over and accountability for: • All funds • Property • 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

28. 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)

29. 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)

30. 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)

31. Subgrantee or Contractor?

32. 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

33. 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

34. 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

35. Subgrantv. 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.

36. 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

37. Financial Management Controls: Procurement

38. 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

39. 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

40. 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

41. 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

42. Vendor Selection Process • §200.320 • Methods of procurement: • NEW: Micro-purchase • Small purchase procedures – N/A to Tennessee • Competitive sealed bids • Competitive proposals • Non-competitive proposals

43. 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

44. 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”

45. 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

46. 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

47. 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

48. Financial Management Controls: Records and Reviews

49. 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

50. Requirements of the Pass-Through Entity