21 st CENTURY COMMUNITY LEARNING CENTERS PROGRAM

1. 21st CENTURY COMMUNITY LEARNING CENTERS PROGRAM Federal Grants Financial Management &Cost Principles and Administrative Requirements FY13 Tehsin Akram, Budget Analyst 2 August 8, 2012

2. Federal Grants Financial Management Cost Principles and Administrative Requirements Specific topics in understanding of: Federal Grant Financial Management-21st CCLC • Use of Funds • Basic Cost Principles – determining allowability • Selected Cost Principles • Property/Inventory Controls • Supplement not Supplant

3. Fundamental Federal Grant Management Process All are inter-related:

4. Use of Funds • 21st CCLC program funds must be used to supplement and not supplant (take the place) of other Federal, State, local, or non-Federal funds • 21st CCLC funds must be used to provide supplemental service to meet the needs of children from low income and low performing schools • 21st CCLC funds must only be used for authorized out-of-school activities to meet the needs of participating students and their families • Charges to the grant must be allowable under the 21st CCLC program

5. Cost Eligibility OMB has issued Grants Management Guidance in three areas: • Cost Principles • Administrative Requirements • Audit In addition: GEPA EDGAR (including CFR 34 Part 80)

6. Cost Principles • Which Circular do I follow? • OMB A-87 – Cost principles for State, Local and Indian Tribal Governments (includes school districts/LEAs) • OMB A-21 – Educational Institutions (includes colleges, universities) • OMB A-122 – Non-Profit http://www.whitehouse.gov/omb/grants_circulars/

7. Cost Principles - Basic Guidelines To Determine Allowability • Necessary and Reasonable • Be Allocable to Federal Awards • Be Authorized or Not Prohibited Under State or Local Laws or Regulations • Conform to Any Limitations or Exclusions Set Forth in the Federal Cost Principles, Federal Laws, Terms and Conditions of the Federal Award

8. Cost Principles - Basic Guidelines To Determine Allowability continued… • Be Consistent with Policies, Regulations, and Procedures That Apply Uniformly to Both Federal Awards and Other Activities of the Governmental Unit • Be Accorded Consistent Treatment • Be Determined in Accordance with Generally Accepted Accounting Principles (GAAP)

9. Cost Principles-Basic Guidelines To Determine Allowability continued… • Not Be Included As a Cost or Used to Meet Cost Sharing or Matching Requirements of Any Other Federal Award • Be Adequately Documented

10. What do These Guidelines Mean? • Necessary and Reasonable • Reasonable • A cost, in its nature and amount does not exceed that which would be incurred by a prudent person under the circumstances • Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the governmental unit or the performance of the Federal Award • The restraints or requirements imposed by such factors as sound business practices, arms-length bargaining, Federal, State, and other laws and regulations and Federal Award Terms and Conditions

11. What do These Guidelines Mean? • Necessary and Reasonable • Reasonable (Cont’d…) • Market prices for comparable goods or services • Whether the individuals concerned acted with prudence in the circumstances, considering their responsibilities to the governmental unit, its employees, the public at large, and the Federal government • Significant deviations from the established practices of the governmental unit which may unjustifiably increase the Federal award’s cost

12. What do These Guidelines Mean? • Necessary and Reasonable • Necessary • The cost claimed for a service or item is directly related to the performance objective of the grant • Cost claimed is consistent with the expenditure category of the grant award • The type of cost is incurred by other grantees

13. What do These Guidelines Mean? • Necessary and Reasonable • Necessary (Cont’d…) Questions to ask for determining “necessary” • Is anyone going to question this and why? • Did I really need this (other cost effective alternatives)? • Can I support (document) the basis for my decision? • Have I considered whether there are any risks?

14. What do These Guidelines Mean? • Costs Must Be Allocable • Direct Costs • Cost is allocable to a particular cost objective if the goods or services involved are directly related, chargeable or assignable to such cost objective in accordance with relative benefits • Can only charge to the grant in proportion (share) to the value received by the program

15. What do These Guidelines Mean? • Costs Must Be Allocable • Direct Costs - examples • Compensation of employees for the time devoted and identified specifically to the performance of the award • Equipment and other approved capital expenditures • Travel expenses incurred specifically to carry out the award Case Study: An Elementary School purchased 10 laptops for use in its afterschool program. The laptops were used half the time in the afterschool grant program and half the time by students in the regular school during the day. The afterschool grant was charged the total cost of $10,000 for all 10 laptops. Allowable or unallowable?

16. What do These Guidelines Mean? • Costs Must be Authorized and Not Prohibited Under State and/or Local Law • Authorized – OMB means the grantee has received specific authority (typically in writing) in the form of an Approved Project Award Notification, and in Accordance with Approved Project Budget

17. What do These Guidelines Mean? • Costs Must be Consistently Administered • A Grantee must consistently administer all of its Federal Awards using the same Accounting Policies and Procedures • Consistent with GAAP

18. What do These Guidelines Mean? • Costs Must be Accorded Consistent Treatment • A cost considered as an indirect expense under one Federal award must be considered as an Indirect Cost under all awards • Must follow uniform policies that apply equally to Federal and non-Federal activities

19. What do These Guidelines Mean? • Costs Must be Adequately Documented • Proof that: • Grant receipts were properly applied • Grant expenditures actually occurred • Expenditures are eligible, allowable, and authorized • Expenditures benefited the grant • Transactions are accurately and timely documented

20. What do These Guidelines Mean? • Costs Must be Adequately Documented • All records pertinent to the award (e.g. award and close-out periods) • Financial • Programmatic • Other Awards

21. Selected Items of Cost • 21st CCLC Program Use of Funds • Funds may be used for program implementation, as well as operation expenses such as: • Personnel and personnel benefits • Staff development • Consultants, subcontractors and evaluators • Classroom equipment, materials and supplies

22. Selected Items of Cost • Some Unallowable costs specified by OMB cost principles: • Alcoholic beverages • Bad debts • Donations (by recipient) • Entertainment costs • Fines and penalties (exceptions) • Fundraising and investment management costs • Goods or services for personal use • Idle facilities (exceptions) • Lobbying • Selling and marketing costs

23. Selected Items of Cost • OMB A-87 • Personnel and personnel benefits: • “Compensation for personnel services includes all remuneration, paid currently or accrued, for services rendered during the period of performance under Federal Awards, including but not necessarily limited to wages, salaries, and fringe benefits.” • “Cost of fringe benefits are allowable to the extent that the benefits are reasonable and are required by law, governmental-unit, employee agreement, or an established policy of the governmental unit.”

24. Selected Items of Cost • OMB A-87 • Personnel and personnel benefits: • “Cost of fringe benefits in the form of employer contributions or expenses: Social Security, employee life, health, unemployment, and worker’s compensation insurance (except as indicated in section 22 Insurance and Indemnification), pension plan costs and other similar benefits are allowable provided such benefits are granted under established written policies

25. Selected Items of Cost • OMB A-87 • Personnel and personnel benefits: • Support for salaries and wages *Proper time distribution records* Based upon approved and documented payrolls

26. Who must maintain time distribution records? • All employees who are paid from Federal funds, or whose salaries are used to match federal funds, are required to document their time and effort But Why? It serves as a “receipt” for payroll expenditures using Federal funds

27. Selected Items of Cost • OMB A-87 • There are two types of participating employees: • Employees who work solely on a single Federal cost objective – SEMI-ANNUAL CERTIFICATIONS • Employees who work on more than one (multiple) cost objective (split funded) – monthly PERSONNEL ACTIVITY REPORT (PAR) • Non-profit organizations: PARs (whether single or multiple cost objectives) Note: Please refer to the “21st CCLC Time and Effort Reporting July 2012” presentation for more details (available on the training CD)

28. Single Cost Objective • Semi-Annual Certifications must be prepared and signed by the employee or the supervisor who has first hand knowledge of the work performed • 100% from a single funding source • 100% with a single type of activity • 100% of time beyond the full-time day on a single activity (e.g., 4 hours afterschool in the 21st CCLC program)

29. Multiple Cost Objective Employee works on – multiple activities/cost objectives • Personnel Activity Report (PAR) – monthly to coincide with 1 or more pay periods (unless a substitute system has been approved by cognizant agency) • Reflect after-the-fact distribution of the actual activity • Account for the total activity for which employee is compensated • Signed by employee Must contain: An “effort statement” Number of hours worked Time worked on all cost objectives The specific Federal cost objective (not just “Federal”)

30. Selected Items of Cost • OMB A-87 • Equipment, materials, and supplies • For personal use – unallowable • Necessary to carry out a Federal award – allowable – direct cost • Charged at actual prices, net of applicable credits • Donated to Federal program – without charge to Federal program

31. Selected Items of Cost • OMB A-87 & EDGAR • Equipment, materials, and supplies • Equipment means – article of nonexpendable, tangible personal property having a useful life of more than ONE yearAND AN ACQUISITION COST of $5,000 or more per unit. However, consistent with the recipient policy, lower limits may be established. • Please note that subgrantees must receive written approval from GaDOE to purchase any item over $5,000 per unit.

32. Property/Inventory Controls for Equipment Acquired with Federal Funds • OMB - Uniform Administrative Requirements for Grants: • Equipment records shall be maintained accurately and include: • Description of the equipment • Manufacturer’s serial number, model number and identification number • Source of equipment, including the award number • Whether title vests in the recipient or Federal Government • Acquisition date (or date received, if donated) and cost • Percentage of Federal participation in the cost of equipment • Location and condition of the equipment and date information reported • Unit acquisition cost

33. Property/Inventory Controls for Equipment Acquired with Federal Funds Equipment records shall be maintained accurately and include: • A physical inventory of the property must be taken and the results reconciled with the property records • How often? – at least once every year • A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft shall be investigated • Adequate maintenance procedures must be developed to keep the property in good condition EDGAR 34 CFR 80.32

34. Disposing of Equipment How do we dispose of 21st CCLC equipment? • Federal regulations, 34 CFR 80.32 and the Financial Management for Georgia Local Units of Administration handbook provide clear guidance • The equipment eligible for disposition must: • Not be needed in any 21st CCLC activity • Not be needed in any other Federal program • Not be needed further for the purpose for which it was purchased • Note: it would not be appropriate to purchase similar equipment in subsequent years

35. Selected 21st CCLC Compliance Requirement – Supplement not Supplant 21st CCLC program funds must be used to supplement and not supplant (take the place) of other Federal, State, local, or non-Federal funds What does this mean? • Here is a simple thought! Think of local funds, (or other funds that are mandated or required under some authority) as the cake, and 21st CCLC funds as the “icing” on the cake! • The icing (21st CCLC) is supplementing, and not taking the place of the cake (Federal, state, local, or non-Federal funds), but simply adding something to improve it!

36. Selected 21st CCLC Compliance Requirement Supplement-not-Supplant How do I determine if this may be a supplanting issue? • Determine whether your agency provided the goods or services with non-Federal funds in the prior year • Determine whether the services were required to be made available under other Federal, state or local laws • Ascertain if the total level of services applicable to the requirement will increase in proportion to the level of Federal contribution (and not used to cover budget deficits) Maintain sufficient relevant documentation to demonstrate that the services would not have been provided if the 21st CCLC funds were not available, including supporting documentation such as legislative actions, budget histories

37. Resources • EDGAR - Education Department General Administrative Regulations http://www.ed.gov/policy/fund/reg/edgarReg/edgar.html • OMB Circular A-21 (Educational Institutions) http://www.whitehouse.gov/omb/assets/omb/circulars/a021/a21_2004.pdf • OMB Circular A-87 (State, Local, and Indian Tribal Governments http://www.whitehouse.gov/omb/circulars_a087_2004/ • OMB Circular A-122 (Non-Profit Organizations) http://www.whitehouse.gov/omb/assets/omb/circulars/a122/a122_2004.pdf • GEPA - General Education Provisions Act http://www4.law.cornell.edu/uscode/html/uscode20/usc_sup_01_20_10_31.html

38. Questions?