TASFAA Spring Conference April 27-29, 2015 1 Fiscal Obligations and Cash Management For discussion purposes only TASFAA Spring Conference April 27-29, 2015 Fiscal Obligations & Cash Management Obtaining & Maintaining Title IV Funds 2 Obtaining TIV Funds • Establish an account in the Department of Education’s G5 Payment System (G5) for requesting funds and reporting expenditures • Establish required bank account(s) for receiving and maintaining funds 3
Transcript
TASFAA Spring Conference April 27-29, 2015
1
Fiscal Obligations and Cash Management
For discussion purposes only
TASFAA Spring Conference
April 27-29, 2015
Fiscal Obligations
&
Cash Management
Obtaining
& Maintaining
Title IV Funds
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Obtaining TIV Funds
• Establish an account in the Department
of Education’s G5 Payment System
(G5) for requesting funds and reporting
expenditures
• Establish required bank account(s) for
receiving and maintaining funds
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TASFAA Spring Conference April 27-29, 2015
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Fiscal Obligations and Cash Management
For discussion purposes only
G5 Bank Accounts
• May have one account for all purposes
−Unless required by ED to have multiple accounts
• May have multiple accounts
−Including a separate DL account
• Must designated a bank account from which
refunds will be sent back via G5
−May be same account used for
other G5 processes
−May be different account
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Bank Account Requirements
• Name of account must contain the phrase
“Federal funds”
OR
• Notify bank that account contains FSA funds
AND file a UCC-1 statement with appropriate
state or local governmental entity
−UCC-1 not required for public schools
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Bank Account Requirements
• TIV Funds must be in an interest bearing or
investment account, unless:
−Drew down < 3 million dollars in Title IV funds in prior
award year AND anticipate same for current award
year
OR
−Can demonstrate that school will earn $250 or less in
interest for the award year
“Perkins funds are always in an interest bearing account”
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TASFAA Spring Conference April 27-29, 2015
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Fiscal Obligations and Cash Management
For discussion purposes only
Bank Account Requirements
• If account is interest bearing
−School may keep first $250 in interest
−School must send, via the G5 system, any
earnings over $250 to ED by June 30 of
each year
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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
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Disbursing Funds to
“Other” Eligible Students
TIV Funds placed in a school’s Federal
bank account can be used to fund other
eligible student accounts if determined
within the 3-business day excess cash
requirements
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TASFAA Spring Conference April 27-29, 2015
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Fiscal Obligations and Cash Management
For discussion purposes only
“Escheating”
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• Must return to ED any FSA program funds, that it attempts
to disburse directly to a student/parent if the they do not
receive or negotiate those funds
– FWS - school required to return only Federal
portion
• Must have process to ensure FSA funds never escheat to
a state or revert to the school or other 3rd party
• If attempt to disburse credit balance by check or EFT and
check not cashed or EFT rejects, school must return the
funds no later than 240 days after the date it issued the
check or made the EFT
Separation of Duties and Internal Controls
• Schools must divide the functions of authorizing
payments and disbursing or delivering funds
• Organizationally independent
• Not members of the same family
• Together do not exercise substantial control over the
school
• Schools must have adequate systems of checks
and balances in system of internal controls
• See 34 CFR 668.16(c)
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Funding Basics
• G5 funding
−Specific for each program and for each award year
−Funding is not student specific
• COD disbursements
−Student specific
−Actual disbursements may be reported up to 7 days prior to disbursement date and must be reported no later than 15 days after the disbursement date or adjustment to a previously-made disbursement
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TASFAA Spring Conference April 27-29, 2015
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Fiscal Obligations and Cash Management
For discussion purposes only
Disbursing Title IV Funds: General & Program Requirements
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Get Ready to Disburse
• Check student’s eligibility
−General eligibility
−Program-specific eligibility
−Period for which student is eligible
• Determine program’s payment periods (timing of disbursements)
−Term-based programs
−Nonterm credit-hour programs and
−Clock-hour programs
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What is a Disbursement?
• School credits student’s account; OR
• Pays student/parent directly
• May use
– FSA funds received from ED
– School funds labeled as FSA funds in advance
of actually receiving FSA funds
• Considered TIV funds at ED set timeframes
• Date of Disbursement
– Student account records and COD
disbursement dates must be the same
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TASFAA Spring Conference April 27-29, 2015
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Fiscal Obligations and Cash Management
For discussion purposes only
Crediting Student’s Account
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• May only credit account for
allowable charges
– Current charges for tuition, fees and
room/board if contracted with school
– Current charges for educational
activities if student/parent provides
written authorization
• Includes books and supplies
Direct Payment
Disburse directly to student or to parent (PLUS)
– By check
– Cash (obtain receipt)
– Electronic funds transfer
• Designated student bank account
–May require account BUT if not opened must still
provide TIV funds to student within required
timeframes
• Stored value card; Debit card
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Disbursements for Books & Supplies
• Must provide a method for Pell-eligible
students to obtain books & supplies no later
than the 7th day of a payment period if
−Title IV funds could have been disbursed 10 days
before beginning of payment period, and
−Disbursed funds would have created a Title IV
credit balance
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TASFAA Spring Conference April 27-29, 2015
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Fiscal Obligations and Cash Management
For discussion purposes only
Disbursements for Books & Supplies
• Must provide the lesser of
−The Title IV credit balance, or
−Amount needed by student, as determined by the
school
• Must determine the method(s) for assisting students
with purchasing books & supplies
• If student utilizes the method, the student is
considered to have authorized the use of funds, for
this purpose only
• Student able to “opt out” of school process
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Early Disbursements
• Term-based credit hour program
– 10 days before the first day of classes of the term
• Clock hour program and non-term credit hour program
– The later of
• 10 days before the first day of classes of the payment period; OR
• the date the student completed the previous payment period
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Early Disbursement Exceptions
• First disbursement of DL to 1st-year, 1st-time borrower
– May not credit student’s account or release funds until
30 days after first day of the student’s program of study
• For single term loans
– Must make two equal disbursement of loan proceeds
– Second disbursement may not be made prior to the
calendar midpoint of the payment period
Rule does not apply to schools with cohort default
rate <15% for the three most recent years for which
data has been published
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TASFAA Spring Conference April 27-29, 2015
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Fiscal Obligations and Cash Management
For discussion purposes only
Entrance Counseling
• Required for
−First-time Direct loan borrowers
−First–time Grad PLUS borrowers
• Must be completed prior to the
first disbursement of the loan
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Late Disbursements
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– For Direct Loans
• A disbursement made after the student is no
longer enrolled at least half time
– For all other TIV aid (accept FWS)
• A disbursement made after the student is no
longer enrolled
– Must be made within 180 days after student
became ineligible
Need a valid ISIR/SAR to actually pay any TIV funds
Conditions for Late Disbursement
• For all programs, while student was eligible, ED
processed ISIR/SAR with official EFC and for
−For Direct Loan - originated within school system
• Origination Date not associated with submission or
ED record approval
• 30-day delay passed, if applicable
−For Perkins and FSEOG - funds were awarded prior
to student leaving school
−For TEACH Grant – grant was originated
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TASFAA Spring Conference April 27-29, 2015
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Fiscal Obligations and Cash Management
For discussion purposes only
Second DL Disbursements
Late second or subsequent
disbursements of Direct Loans
may not be made unless
student has graduated or
successfully completed the
period of enrollment
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Credit Balances
&
Prior Year Charges
Title IV Credit Balance
Title IV funds credited exceed total allowable
charges assessed by the institution
Institutional Charges = $3,000
Credits to account = $6,147
Pell $1,875
Sub DL $1,272
FSEOG $2,000
Scholarship $1,000
Title IV Credit Balance = $2,147
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TASFAA Spring Conference April 27-29, 2015
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Fiscal Obligations and Cash Management
For discussion purposes only
Paying Title IV Credit Balance
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• School must pay credit balance to student or parent (if PLUS) no later than
– 14 calendar days after balance occurs if it occurs after first day of classes of payment period
– 14 calendar days after first day of classes if it occurs on or before the first day of classes of payment period
Paying Credit Balance: Check
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• Considered paid on date
–School mails check
–Notifies student within 14 day timeframe
that funds are available for immediate
pick-up and provides specific location
• Can hold for 21 days from notification
• If student doesn’t pick up within 21 days
from notification, must immediately mail or
EFT, or return to ED
Holding Credit Balances
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• Student or parent may voluntarily authorize
school to hold credit balance
• School must
– Identify amount of funds held for each student/
parent in a subsidiary ledger account
– Maintain cash equal to credit balances held
• School may retain interest earned on funds
TASFAA Spring Conference April 27-29, 2015
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Fiscal Obligations and Cash Management
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Holding Credit Balances
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• School must pay remaining balance
–Loan funds by end of the loan period
–Other FSA program funds by end of last
payment period in award year for which
they were awarded
Note: May not go beyond these deadlines even with
student or parent authorization!
Prior Year Charges - GEN-09-11
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• Ability to use current TIV funds to pay minor
prior year charges
• Prior year charges – up to $200
• “Year” – loan period if Direct Loan
• “Year” – award year if NO Direct Loan
• Determine the “Year” for each Term
• Student/Parent cannot provide authorization
to pay for more than $200
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TASFAA Spring Conference April 27-29, 2015
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Fiscal Obligations and Cash Management
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Resources
• IFAP – www.ifap.ed.gov
• FSA Handbook
−Volume 2, Chapters 3 and 4 (Fiscal
Responsibilities)
−Volume 4 (Cash Management)
−Volume 6 (Campus-Based Programs)
• fsatraining.info (various training modules)
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Resources
• 34 CFR 668.16(c) Standards of Administrative Capability
• 34 CFR 668.24(b) Record Retention, Fiscal Records
• 34 CFR 668.82 Standards of Conduct
• 34 CFR 668 Subpart K (.161- .166) Cash Management
