ED’s Office of the Chief Financial Officer

1. ED’s Office of the Chief Financial Officer Recap of Cash Management Requirements

2. Sound check Audio is available via internet. Please be sure your… speakers are attached and turned on and your volume is up.

3. Discussion Points

4. Memo from Education’s Chief Financial Officer See entire 4-page Memo at http://www2.ed.gov/policy/fund/guid/gposbul/gposbul.html

5. Frequently Asked Questions (FAQ)See entire 4-page FAQ sheets at http://www2.ed.gov/policy/fund/guid/gposbul/gposbul.html • Q What are the Federal Laws and Regulations on cash management? • A The Cash Management Improvement Act of 1990 (CMIA) is the overriding public law for cash management. It was enacted by Public Law 101-453, 31 U.S.C. 3335 and 6503. The implementing regulations are in Title 31 of the Code of Federal Regulations (CFR), Part 205,http://www.fms.treas.gov/fedreg/31cfr205final.pdf. In addition, the Education Department General Administrative Regulations (EDGAR) defines the CFR specific to administering the U.S. Department of Education’s (the Department’s) grants in 34 CFR, Part 74 and Part 80, http://www.access.gpo.gov/nara/cfr/waisidx_08/34cfrv1_08.html • Q Who is responsible for monitoring cash drawdowns to ensure compliance with cash management policies? • A Recipients must monitor their cash drawdowns and their subrecipients to assure substantial compliance to the standards of timing and amount of advances. Additionally, when considered necessary and feasible by the Federal agency, recipients may be required to report the amount of cash advances in excess of three days’ needs in their hands and of their subrecipients and to provide short narrative explanations of actions taken by the recipient to reduce the excess balances. • Q How soon may I draw down funds from the G5 grants management system (G5 replaced E-Payments in December 2007)? • A Grantees are required to minimize the amount of time between the drawdown and the use of funds from their bank accounts. (See EDGAR §74.21-22 and §80.20-21.) Funds must be drawn only to meet a grantee’s immediate cash needs for each individual grant. Each time you use the G5 system to draw down a payment you check a box certifying that you are adhering to cash management requirements and that the funds will be spent within 3 days. The G5 screen displays the following message: I certify, by processing this payment request and/or re-allocation, that the funds are being expended within three business days of receipt for the purpose and condition of the agreement.

6. Cash Management Improvement Act (CMIA) 31 CFR Part 205 regulations are available on the web at http://www.fms.treas.gov/fedreg/31cfr205final.pdf • CMIA and Treasury Regulations improves the transfer of Federal funds to State, and Territory Governments; • Outlines the rules and procedures for efficient funds transfer; and • Requires recipients to have procedures in place to comply with the Act.

7. Cash Management Improvement Act • Draw or request funds only for immediate cash needs • Minimize time from receipt to funds disbursements CMIA

8. Education Department General Administrative Regulations (EDGAR)34 CFR Part 74 and Part 80 available on the Web at http://www.access.gpo.gov/nara/cfr/waisidx_08/34cfrv1_08.html • Recipients without a TSA & all Subrecipients must adhere to EDGAR: • § 74.21 and § 80.20 Establishes • rules for disbursing Federal funds • rules for preparing cash transactions reports • recipient’s responsibilities for monitoring cash drawdown requests by subrecipients • § 74.22(a) and § 80.21(b) • sets the basic standard for payments – minimize time lapsing between transfer of funds from ED and disbursement of funds by recipients and subrecipients

9. Education Department General Administrative Regulations • Minimize the time lapsing between receipt and funds disbursement. • Recipient is responsible for monitoring cash drawdown requests by subrecipients • Excess interest earned on Federal funds must be returned promptly EDGAR

10. Cash Management Policies For PaymentsCMIA  TSA  EDGAR

11. Cash Management Policies for Payments • Recipients and subrecipients are responsible for: • Establishing a system of internal control with procedures in place to comply with Federal cash management regulations • Requesting & managing their own funds • Certifying that funds will be used immediately • Depositing advances of Federal funds in interest bearing accounts for discretionary grants(depending on program, may not need interest-bearing account) • Returning interest, if earned, for formula grants • Using the online G5 request system when payments are made through the advance payment method

12. Cash Management Policies for Payments • Recipients may draw down grant funds via the G5 Online Payment system (https://www.g5.gov/int/g5help/toc.html) • For any cash drawn via ED’s G5 system the recipient certifies that… “by processing this payment request and/or re- allocation, that the funds are being expended within three business days of receipt for the purpose and condition of the agreement.” 

13. Cash Management Policies for Payments • Minimize the time between the draw of funds and the disbursement • Recipient may only draw funds to meet the immediate cash needs of the grant or cooperative agreement • Recipient should draw down funds only after it’s been requested by their subrecipient, in cases where there is a subrecipient • Recipient and subrecipient must use grant funds only for obligations incurred during the funding period

14. Cash Management Policies for Payments • Return Excess Interest Earned on Federal Funds

15. Cash Management Policies for Payments • Best Practices • Recipients must adhere to CMIA and EDGAR • Subrecipients must adhere to EDGAR • Recipients must regularly monitor the payment requests made by their subrecipients to ensure that those requests conform to appropriate laws & regulations that apply to the recipient • Regularly monitor fiscal activity on a continuous basis • Recipients must also regularly monitor the fiscal activity of their subrecipients on a continuous basis

16. Cash Management Policies for Payments • Best Practices (continued) • Return interest earned promptly • Recipients must ensure that their subrecipients return interest earned promptly • Recipients should plan carefully for cash flows for grant projects and review projected cash requirements before each drawdown • Subrecipients should plan carefully for cash flows for grant projects and review projected cash requirements before each request for funds from recipient • Obtain any board/official’s approval prior to making payment request or draw down

17. Other Cash Management Requirements • Program-Specific Cash Management Requirements • May supplement or override EDGAR • Based on the authorizing legislation • Based on program regulations • For more information, contact the program officer noted in the Grant Award Notification (GAN) about the specific grant

18. Other Cash Management Requirements • Program-SpecificCash Management Requirements (continued) • An example of Program specific regulations that has precedence over EDGAR Part 74 and Part 80: • The Student Assistance General Provisions enacted in 34 CFR Part 668, Subpart K- Cash Management, Sections 161-166, provides the rules and procedures for Title IV, HEA grant program funds (i.e. Federal Pell grant and Federal Work Study, etc) • For more information, contact the program officer noted in the Grant Award Notification (GAN) about the specific grant

19. Effects of Noncompliance to Cash Management Requirements • The Department may: • Temporarily withhold cash payments pending correction of the deficiency by the recipient or subrecipient or take more severe enforcement action, • disallow (that is, deny both use of funds and matching credit for) all or part of the cost of the activity or action not in compliance, • wholly or partly suspend or terminate the current award for the recipient’s or subrecipient’s program, • withhold further awards for the program, or • take other remedies that may be legally available.

20. RECAP • CMIA  TSA  EDGAR • Recipients must monitor their cash drawdownsand their subrecipient’s requests for funds to ensure compliance • Recipients may only draw funds to meet immediate cash needs (rule of thumb: 3 day-rule) • Recipients and subrecipients must minimize the time lapsing between the receipt of funds from ED and disbursement of funds (rule of thumb: 3 day-rule) • Recipients should request funds only after it’s been requested by their subrecipients, in cases where there is a subrecipient

21. RECAP (continued) • Deposit advances of Federal funds in interest bearing accounts for discretionary grants (depending on program, may not need interest-bearing account) • Interest earned on your grant funds occurs when you draw more money than you need to cover your immediate cash needs • Recipients and subrecipients must return interest earned promptly • The Department’s G5 system has great tools to assist you in monitoring your grant funds • There are consequences for noncompliance

22. Cash Management is Very Important!

23. List of URL Resources • Memo and FAQs on Cash Management http://www2.ed.gov/policy/fund/guid/gposbul/gposbul.html • Cash Management Improvement Act (31 CFR Part 205) http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&tpl=/ecfrbrowse/Title31/31cfr205_main_02.tpl • Education Department General Administrative Regulations (34 CFR Parts 74 and 80) http://www.access.gpo.gov/nara/cfr/waisidx_08/34cfrv1_08.html • Education Department General Administrative Regulations (34 CFR Part 668) http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=8882eab3eb159be8def7dbddb191b072&rgn=div5&view=text&node=34:3.1.3.1.34&idno=34 • G5 Online Payment system https://www.g5.gov/int/g5help/toc.html

24. Office of the Chief Financial Officer’s Cash Management Contact Information • Cynthia Heath, OCFO, Financial Management Operations, cynthia.heath@ed.gov or (202) 245-8043 • Gail Matthews, OCFO, Financial Management Operations, gail.matthews@ed.gov or (202) 245-8074 • ED-OIG Hotline: • oig.hotline@ed.gov, 1-800-MIS-USED • General Info: at http://www2.ed.gov/policy/fund/guid/gposbul/gposbul.html

25. Questions Answers

26. Thank you for attending! See our website for future web conferences http://www.ed.gov/policy/gen/leg/recovery/web-conferences.html#schedule