Federal Grants Management Training May 6, 2013 Renaissance Downtown Phoenix, AZ Presented by Michael Brustein, Esq. Brustein & Manasevit, PLLC [email protected]www.bruman.com
Transcript
Slide 1
Federal Grants Management Training May 6, 2013 Renaissance
Downtown Phoenix, AZ Presented by Michael Brustein, Esq. Brustein
& Manasevit, PLLC [email protected] www.bruman.com
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1.The State of Congress 2.Fiscal and Budgetary Developments
(Sequestration) 3.The State of the Federal Role in Education 4.A
Test on Federal Grants Management 5.EDGAR and OMB Tutorial
6.Questions 2
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Congressional Productivity The 112 th Congress was the least
productive since analysts started keeping track 112 th : 283 Public
laws passed Clinton impeachment 4
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Congressional Productivity Lack of Productivity is a result of:
Gridlock in legislative process Divides between parties and within
parties Divided Congress, continued influence of Tea Party
Significant focus on must-pass legislation in contentious policy
areas like federal spending 113 th Congress not doing much better
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Congressional Popularity > Source: PPP poll January 2013
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Retirements and Turnover Significant numbers of Representatives
and Senators have retired or announced pending retirement in recent
years. Most cite age, but also driven out by gridlock, partisan
politics, etc. Voter dissatisfaction means greater electoral
turnover in Congress Lucrative post-Congressional job opportunities
add incentive to retire at younger age 9
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Largest Turnover Since 1970s Current announced retirements,
plus defeats in last election, means largest turnover in Congress
since 1970s Especially pronounced in Senate Expect continued
turnover in next few years 10
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The State of Congress Overall: Continued partisanship
Significant turnover on education-relevant Committees and Committee
leadership Loss of institutional knowledge/relationships Focus on
fiscal policy above all else 11
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Sequestration The Fiscal Cliff Deal FY 2013 Appropriations How
Cuts Will be Implemented FY 2014 and Beyond 12
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Sequestration Also known as the sequester A series of
automatic, across-the-board budget cuts Amount and type of cuts
depends on category of spending Following procedures laid out in
1985 law 13
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Budget Control Act of 2011 Set deficit reduction targets
Created Congressional debt supercommittee If supercommittee failed
to come up with a deficit reduction plan meeting targets, automatic
cuts triggered Sequestration as failsafe/threat not really meant to
go into practice Because supercommittee did not come up with a
plan, sequestration is triggered American Taxpayer Relief Act Also
known as the fiscal cliff deal Modified sequestration amounts,
timing Where does sequestration come from? 14
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How does sequestration work?* Triggers procedure set out in
Balanced Budget and Deficit Control Act of 1985 Congress identifies
total amount to be cut and time period over which cuts occur Cuts
are divided evenly by year Cuts are split between defense and
non-defense spending Exempt programs (outlined in law) are removed
from equation All other programs see equal, across-the-board cuts
in first year (in this case, modified procedure for subsequent
years) General procedure is subject to modification by Congress
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The Fiscal Cliff Deal In the days leading up to the end of
2012, fiscal picture looked dire Temporary (Bush-era) tax cuts set
to expire Sequestration set to go into effect January 2 nd Concerns
about how sequestration, increase in tax rates would affect economy
No alternatives in place 16
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The Fiscal Cliff Deal Congress passed comprehensive
spending/tax package known as American Taxpayer Relief Act early on
New Years Day Extended most of the Bush-era middle-class tax cuts
(though not payroll tax cuts) Raised marginal income tax rates on
those with incomes above $400,000 for individuals ($450,000 for
couples) Made changes to implementation date of sequestration and
total cut amount 18
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Changes to Sequester Delays start by two months (was January 2;
now March 1, 2013) Reduces FY 2013 cut by $24 billion to compensate
for shorter time period Offsets reduction in cuts with: $12 billion
in new taxes to IRAs that are converted from traditional to Roth
plans $12 billion in cuts to annual spending caps Split evenly
between Defense and non-defense Cut now at 5% of FY 2013 funding
Sequestration still applies for remainder of FY 2013 and for FY
2014 through FY 2021 19
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Fiscal cliff deal creates $24 billion in offsets to pay for
delay Half will come from spending cuts ($12 billion) Split evenly
between defense and non-defense discretionary (NDD) funding
(includes education) ($6 billion each) One-third of cuts to be
applied in FY 2013, remaining two thirds in FY 2014) $2 billion in
NDD cuts for FY 2013 Vanishing Sequestration Cuts 20
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Fiscal cliff deal spending cuts will be applied through
reductions in Congressional spending caps Cuts to caps =/= cuts to
funding These cuts are in addition to any across-the-board cuts
from sequestration Due to differences between spending and caps,
little anticipated effect this year Takes originally estimated 8.2%
cuts down to 5% Vanishing Sequestration Cuts 21
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Two major factors in determining federal funding under
sequestration: 1.Congressional spending caps 2.Regular-year federal
appropriations 22
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Regular-Year Appropriations Still important!!! For FY 2013,
sequestration cuts represent reductions below the budget baseline
(current federal spending levels) Funding for FY 2013 set by two
continuing resolutions (CRs) (temporary budget measures) Second FY
2013 CR set funding at FY 2012 levels, with some exceptions E.g.
Head Start (additional $33.5 million) For FY 2014 and beyond, cuts
are incorporated into funding levels through regular appropriations
process 23
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How Sequestration Cuts are Calculated Adjust total cut for
interest to reflect lesser debt principal $1.2 trillion $984
billion Divide by year from FY 2013 through FY 2021 $109.3 billion
Reduce FY 2013 cuts by $24 billion, to $85.3 billion* Split
function between defense and non-defense spending (about $42.7
billion each in FY 2013, $54.5 billion each per subsequent year)
Take exempt programs out of the equation Spread cuts equally among
remaining programs in FY 2013 Cut is taken at federal program,
project, or activity level Sequestration cut will be 5% of FY 2013
funding* (*change due to fiscal cliff deal) 24
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The Impact of Sequestration (after the fiscal cliff deal)
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How Cuts will be Implemented All funds allocated October 2012
and later are subject to cuts starting March 1 Single allocation or
monthly programs affected starting with first allocation after
sequester date (e.g. April 1) For competitive grants, funds
previously awarded will remain unaffected(even for
multi-year/continuation grants) Cuts will be implemented in next
competition For bifurcated funding programs*: Advance funding
received in October of 2012 did not see cuts when allocated BUT
cuts will be calculated and total FY 2013 cut deducted from July
2013 allocation *Per a July 2012 memorandum, confirmed in February
26 conference call. 26
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In programs with bifurcated funding, grantees usually receive
about 75% of program funds in October, and the remaining 25% the
following July. Though sequestration cuts represent approximately
5% of years allocation, that entire amount will be taken out of
July 2013 funds. FY 2013 Funding Under Sequestration 27
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Sample Sequestration Cut Assume the (fictional) School is Cool
(SIC) grant program provides $100,000 per year to your State As
with most bifurcated funding programs, 75% of SIC funds ($75,000)
are distributed to States in October, with the remaining 25%
($25,000) available in July Under sequestration, ED* provided the
full funding amount in October of 2012. However, it will calculate
a cut for the full fiscal year (approximately 5%, or $5,000) and
will apply that full years cut against July 2013 funds. *Per a July
2012 memorandum, confirmed in February 26 conference call. 28
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Sample Sequestration Cut FY 2013 Your State received its
regular SIC appropriation ($75,000) on October 1, 2012. The
full-year sequestration cut of $5,000 will be taken out of July
2013 funding So the SIC funds sent out on July 1, 2013 will be
$20,000 ($25,000 - $5,000) *Per a July 2012 memorandum, confirmed
in February 26 conference call. 29
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NOTE: Actual allocations may shift by more or less than 5%
Because of variations in census data, poverty data, and per pupil
expenditures, FY 2013 allocations under Title I and other formula
programs will be different from FY 2012 In addition, ED will not
reduce small or shrinking districts below hold-harmless amount,
leaving other district to share that cut Result: actual cuts from
2012 to 2013 at district level can range from 0% to approximately
10% 30
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Second FY 2013 CR contains provision that triggers automatic
cuts if appropriations were above spending caps OMB says this has
occurred Will mean 0.2% across-the-board cut in addition to
sequestration in FY 2013 Unclear at this point how this cut will be
implemented, but likely through sequester process NOTE: Second CR
Means Additional Across-the-board Cut 31
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Sequestration in 2014 and Beyond For FY 2014 through 2021, cuts
are applied through reductions in annual spending caps as part of
regular Congressional appropriations process Cuts will be applied
to both allocations for bifurcated programs (October and July)
Total cut is estimated at 8.2% of non-defense discretionary
spending But actual cut for each program depends on appropriation
bills 32
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Sample Sequestration Cut FY 2014 For FY 2014 and beyond,
sequestration cuts (and cuts from the fiscal cliff deal) are taken
out of 302(b) appropriations caps Sequestration will not be applied
as a percentage cut Appropriators have discretion in distributing
spending/cuts So 75% of SIC funds will be sent out in October, and
25% in July The only variable here is total program funding the
size of the pie. 33
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Reductions in caps give appropriators more discretion in
choosing where to spend or trim (as opposed to automatic cuts) Can
preserve some programs entirely Expect preservation, in large part,
of Title I, IDEA funds Can zero out programs entirely Can be
unpredictable In years where budget set late, funding is up in the
air Sequestration in 2014 and Beyond 34
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The FY 2014 Double Whammy? States and school districts
generally structure budget cycles differently from the federal
government For federal government, FY13 funding = October 2012 +
July 2013 allocations For States/districts, SY 2013-14 = July 2013
+ October 2013 Assuming FY 2014 program funds are cut, SY 2013-14
will see a double reduction: July 2013 funding will be cut
proportionate to full FY 2013 October 2013 funding will be cut by
up to 8.2%, depending on Congressional appropriations 35
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FY 2014 Appropriations Progress Both House and Senate have
passed non-binding budget resolutions House: cut $5.7 trillion over
next decade Senate: cut $975 billion in spending over next decade,
matched with $975 billion in new revenues President released annual
budget proposal April 10 th Both chambers determined to get budget
done on time 36
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The State of the Federal Role in Education
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1960s: Congress began recognizing unmet educational needs
Children in Poverty Students with Disabilities Vocational Training
Limited English Proficient Students Homeless Students 38
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Federal education programs Designed to address specific unmet
needs 39
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Limited Federal Capacity State administered programs created
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Department of Health Education and Welfare Education
responsibility generally given to the U.S. Department of Health,
Education, and Welfare (HEW) United States Office of Education
Divided into program bureaus with specific responsibility
Elementary and Secondary Education Vocational Education Special
Education, etc. 41
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Office of Education Bureaus: Responsibility for individual
program Individual programs contained separate administrative rules
Not always consistent Burdensome due to differing requirements
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U.S. Department of Education (ED) in 1980 Education
responsibility transferred HEW becomes ED and Health & Human
Services (HHS) 43
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ED Separation of program function is preserved Funds allocated
to States for program administration Funds allocated to States for
distribution to school districts local education agencies (LEAs)
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State Education Agencies (SEAs) SEAs expanded Significant
function: Administer federal programs Divided into program offices
Generally reflect federal organization Examples Elementary and
Secondary Students with Disabilities Career Education 45
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Federal Government recognizes inefficiency! Programs with
separate administrative requirements Duplication of efforts
Inconsistent requirements Changes need to be program by program
Leads to administrative standardization 46
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Administrative Standardization General Education Provisions Act
(GEPA) Education Department General Administrative Regulations
(EDGAR) Single Audit Act Office of Management and Budget (OMB)
Circulars 47
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GEPA Part of the organic law establishing EDs structure
Cross-cutting provisions 48
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EDGAR Department of Education administrative rules covering all
ED programs 49
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Single Audit Act OMB Circular A-133 Standardized audit
requirements for all entities expending > $500,000 federal $
annually 50
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OMB Circulars Government-wide principles for determining what
costs are allowable 51
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How can we spend these funds? Always begin with program statute
Ask: a)What can we do? b)Who can we serve? c)Any specific
restrictions? 52
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What controls the State LEA relationship regarding the federal
programs? Part 76 34 CFR Part 76 (Code of Federal Regulations) LEA
applies to the State for funding State notifies LEA Amount Timing
Federal requirements applicable SEA assures intended uses are
within the law LEA commits to follow the plan it submits to SEA
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General Education Provisions Act (GEPA) GEPA: Is the program
subject to the cross-cutting authority of ED on State Administered
Programs? Applicable program Program for which the Secretary of
Education has administrative responsibility No Child Left Behind
Individuals with Disabilities Education Act Carl Perkins Career and
Technical Education Act 54
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GEPA EDGAR EDGAR applies and expands GEPA requirements
Application Process State applies to ED Local Education Agency
(LEA) applies to State (SEA) 55
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GEPA EDGAR Funds flow ED SEA LEA States are responsible for and
must monitor LEA compliance SEAs are responsible to ED to properly
administer federal grant funds 56
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GEPA EDGAR Funds flow to SEA after ED approval of application
Funds flow to LEA after SEA approves local application Available
for 27 months for obligation Obligation is not expenditure 90 days
additional for liquidation Obligation defined 57
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Single Audit Act OMB Circular A-133 Historically: Audit
requirements historically separate and within program statutes
Requirements inconsistent Single Audit Act (A-133) Requires audit
by independent auditor of federal programs whenever recipient
expends over $500,000 federal funds all services Creates uniform
standards of Independence Selection of items to be audited Auditing
standards Contains program guides for auditor use Compliance
supplements 58
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Single Audit Act OMB Circular A-133 Compliance Supplement Each
major program Guide developed by ED/OMB Important resource ED view
of important elements Auditor responsibility 59
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OMB Circulars Government-wide Contain general principles for
determining allowable costs http://www.whitehouse.gov/omb/circ
ulars_default http://www.whitehouse.gov/omb/circ ulars_default
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OMB Circular A-87 43 Items of Cost Can I pay for attendance at
a professional development meeting for a Title I teacher? What
documentation do I need to support salary payments? 62
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Possible Massive Changes to Circulars NPRM 2/1/13 Close of
comment period: Extended 06/02/13 Analysis of public comment Final
regulation not likely before 1/1/14 EDGAR revisions within one year
of final regulation ? No splitting FY 63
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Why Supercircular??? 1.Greater simplicity 2.Greater consistency
3.Obama Executive Order on Regulatory Review 2011 Increase
efficiency Strengthen oversight 64
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What is covered? 1.Administrative Requirements (A- 102, A-110)
2.Cost Principles (A-87, A-21, A- 122) 3.Audit Requirements (A-133)
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GEPA And finally What happens if I dont follow the rules?
Enforcement procedures Recovery of funds Termination of program
High Risk States Compliance Agreement 66
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Grants Management Test
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EDGAR and OMB Circular Tutorial
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Key Questions 1.What is the significance of EDGAR? 2.Which OMB
Circulars apply? 3.What is the relationship to program regulations?
4.What legal authorities do you rely on? 69
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Anatomy of EDGAR Administrative Rules SEAs / LEAs Part 80
Postsecondary Part 74 Non Profits Part 74 State Administered
Programs Part 76 Direct Grant Part 75 Enforcement Part 81 Lobbying
Part 82 Debarment / Suspension Part 85 FERPA Part 99 70
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Roadmap 1.Standards for Financial Management 2.How to Determine
if a Cost is Allowable 3.Cash Management Controls and Obligations
4.Asset Controls 5.Procurement Controls 6.Selected Cost Items
7.Audits and Enforcement 71
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Roadmap of EDGAR and OMB Circulars a)80.20(b) (p. 107)
Standards for Financial Management Systems b)80.22 (p. 108)
Allowable Costs c)A-87 Basic Guidelines (p. 291-292) d)A-87
Composition of Cost (p. 292) e)80.23 (p. 108) Period of
Availability of Funds f)76.707 (p. 87) When Obligations Are Made
g)76.708 (p. 87) When Certain Subgrantees May Begin to Obligate
Funds h)76.710 (p. 88) Obligations Made During a Carryover Period
are Subject to Current Statutes, Regulations, and Applications
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Roadmap of EDGAR and OMB Circulars i)80.32 (p. 114) Equipment
j)80.36 (p. 115) Procurement k)80.42 (p. 124) Retention and Access
Requirements for Records l)76.730 (p. 89) Records Related to Grant
Funds m) 80.40 (p. 122) Monitoring and Reporting Program
Performance n)80.43 (p. 126) Enforcement o)76.401 (p. 74)
Disapproval of an Application Opportunity for a Hearing 73
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Roadmap of EDGAR and OMB Circulars p)Appendix B to A-87 (p.
293) Selected Items of Cost + Advertising (p. 294) (outreach) +
Personnel Costs (p. 295) + Meetings (p. 305) + Travel (p. 308)
q)A-133 Single Audits r)+ 210 (p. 358) Subrecipient and Vendor
Determinations + Compliance Supplement (p. 354) + 200 (p. 357)
Audit Requirements + 320 (p. 363) Report Submission + Pass-Through
(p. 367) s)81.32 (p. 134) Proportionality t)Appendix to Part 81 (p.
139) Illustrations of Proportionality u)81.33 (p. 135) Mitigating
Circumstances 74
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This presentation is intended solely to provide general
information and does not constitute legal advice. Attendance at the
presentation or later review of these printed materials does not
create an attorney-client relationship with Brustein &
Manasevit, PLLC. You should not take any action based upon any
information in this presentation without first consulting legal
counsel familiar with your particular circumstances. Disclaimer
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