CASH MANAGEMENT NYSFAAA Date Nautochia Webb U.S. Department of Education Training & Information Services Division

1. CASH MANAGEMENT NYSFAAA Date Nautochia Webb U.S. Department of Education Training & Information Services Division

2. Financial Responsibility Standards All schools must meet general standards and past performance standards

3. 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

4. Financial ResponsibilityGeneral StandardsProprietary or Private Nonprofit Institutions Composite score of at least 1.5 Sufficient cash reserves to make required returns of Title IV funds School is current in its debt payments, and School is meeting all of its financial obligations Audited financial statements do NOT express doubt about continued existence of school (e.g., “going concern” or an adverse, qualified or disclaimed opinion)

5. Composite Score Calculation (example: Proprietary Institution)

6. Composite Score Scale PASS ZONE FAIL

7. Refund Cash Reserve Standards • School is considered to have sufficient cash reserves if it meets one of the following: • Satisfies the requirements of a public school • Is located in a state that has a tuition recovery fund approved by the Department and the school contributes to the fund, or • Demonstrates that it makes its Returns to Title IV Funds in a timely manner

8. Timely Refund Standard School demonstrates it makes refunds timely if fewer than 5% of required refunds sampled in audit or program review were late

9. Timely Return of Title IV Funds • School must perform calculation within 30 calendar days of date that school determines student is a withdrawal • School 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

10. Return of Title IV Funds Statutory formula that determines amount of Title IV aid a student has earned during his/her period attendance Applies to any Title IV student who begins attendance and then completely withdraws, or otherwise ceases attendance

11. Return of Title IV Funds • Student earns Title IV through attendance • Percentage 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 programs • scheduled clock hours in clock hour programs

12. Return of Title IV Funds School is responsible to return Title IV funds disbursed, but not earned by student

13. Financial Responsibility and Current in Debt Payments • A school is not current in its debt payments if • It is in violation of any existing loan agreement at its fiscal year end, or • Fails 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

14. 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 Department • In 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

15. 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 required • Has failed to resolve any compliance issues identified in program reviews or audits

16. Proprietary Schools and the 90/10 Rule • May derive no more than 90% of its revenues from the Title IV federal student aid programs • 10% of revenue must come from non-Title IV funding • Tuition, fees, other institutional charges, school activities necessary for students enrolled in those programs

17. Proprietary Schools and the 90/10 Rule Must calculate using the cash basis of accounting Must report as a footnote in annual financial statements See 34 CFR 668.14(b)(16) and 34 CFR 668.28

18. 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

19. Campus Based Programs Information and Additional Fiscal Information

20. Campus-Based Administrative Cost Allowance (ACA) • Use to defray costs of administering the program • School must request and draw down • ACA is based on Campus-Based expenditures (federal plus nonfederal) for the award year • FSEOG funds disbursed to students • FWS gross wages paid to students • Perkins Loans advanced to students

21. Campus-Based Requirements Get Ready – Fiscal Obligations • Application process • Mark programs on PPA (new school) • Complete FISAP by October 1, 2012 • Application for 2013-2014 • Report for 2011-2012 • Matching requirements • Other uses of funds

22. Campus BasedMatching Requirements Get Ready – Fiscal Obligations • General rule • Federal share may not exceed 75% of FSEOG, FWS or Perkins expenditures • Automatic waivers of FSEOG and FWS matches for Titles III and V institutions • Specific FWS federal match waivers

23. FSEOG Match • Nonfederal match • Institutional grants and scholarships • Tuition or fee waivers • State scholarships • Foundation or other charitable organization funds • Various methods for matching • Federal allocation may not exceed 75% of total awards made

24. FWS Match • Nonfederal match may be noncash • Private nonprofit organization or federal, state, or local public agency employer • Up to 90% federal for up to 10% of students • Private for-profit employer • Minimum 50% nonfederal match

25. FWS Automatic Match Waivers Get Ready – Fiscal Obligations If work performed by student is for the institution, a public agency or a private nonprofit organization, AND Student is a reading tutor, math tutor and/or performing family literacy activities, THEN Funds used to pay students may be 100% federal funds

26. FWS Community Service Requirements Get Ready – Fiscal Obligations School must use 7% of total allocation for community service employment Must include one reading tutor project or family literacy project

27. Pell Administrative Cost Allowance • Use to defray costs of administering the program • Funds 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

28. 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)

29. 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

30. 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

31. Financial Aid Office Responsibilities • Determine the amounts disbursed each month from each program (according to Financial Aid Office records).

32. 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

33. 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.).

34. 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

35. 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.

36. 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

37. 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 equalsprojected immediate need

38. 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

39. 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

40. 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

41. 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 mustbe reported no later than 15 days after the disbursement date (30 days for disbursements prior to April 1, 2013)

42. 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

43. 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

44. 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

45. Funding Process School makes or schedules actual disbursements to student accounts G5 transfers funds to school’s federal funds account School transfers funds from federal funds account to operating account School reports actual disbursements to COD School requests funds from G5 for transfer to school’s bank School funds actual disbursements to student accounts 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

46. Prior-Year Recoveries • Previously disbursed funds that are subsequently recovered by institution • Funds must be returned to the proper award number via G5

47. 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

48. 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.

49. 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

50. 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