Interest Earned on Federal Funds by Subgrantees
This advisory has been updated to ensure that subgrantees are aware of federal requirements governing interest earned on federal funds and take appropriate steps to be in compliance.
(New) Awards made on or after 12/26/14:
For these awards, Title 2 of the Code of Federal Regulations Part 200- Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards provides the specific administrative requirements on interest earned. 2 CFR 200 also known as the Uniform Grants Guidance consolidates the administrative requirements for all entities receiving federal funds. The amount that may be retained as well as the remittance of an excess interest is the same regardless of the type of agency that received the federal funds. However, the guidance still requires that the subgrantees minimize the time between receipt of the funds from the State Education Department (pass through entity) and their disbursement by the local agency (sub-grantee) for grant/project activities.
Specifically, section 200.305 (b)(9) states that ” Interest earned amounts of $500 per year may be retained by the non-Federal entity for administrative expense.” In addition, it explains that any interest earned on Federal advance payments deposited in interest-bearing accounts in excess of the $500 amount allowable for administrative expenses cannot be retained to offset any direct or indirect program costs and must be remitted annually to the federal government. Per these new guidelines, the excess interest must be returned to the “Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either Automated Clearing House (ACH) network or a Fedwire Funds Service payment.” Also, the remittances must include “pertinent information of the payee and nature of payment in the memo area (often referred to as ‘addenda records’ by Financial Institutions) as that will assist in the timely posting of interest earned on federal funds.” Specific information on remittance via ACH (including international ACH returns), Fedwire, or mail may be found in Section 200.305 (b)(9)(i) through Section 200.305 (b)(9)(iv). Some of the details are summarized below.
- Returns via ACH:
- Routing Number: 051036706
- Account number: 303000
- Bank Name and Location: Credit Gateway - ACH Receiver St. Paul, MN
- Returns via Fedwire*:
- Routing Number: 021030004
- Account number: 75010501
- Bank Name and Location: Federal Reserve Bank Treas NYC/Funds Transfer Division New York, NY
- Returns via check only for agencies with no electronic remittance capability:
- Checks should be made payable to: “The Department of Health and Human Services.”
- Mailing address - HHS Program Support Center, P.O. Box 530231, Atlanta, GA 30353-0231
(* Please note organization initiating payment is likely to incur a charge from your Financial Institution for this type of payment)
Awards made prior to 12/26/14:
For these awards, the Federal Education Department General Administrative Regulations (EDGAR), also referred to as Title 34 of the Code of Federal Regulations (CFR) Parts 74 & 80, specifies steps to be taken by grantees (the State) and subgrantees (local agencies receiving grants through the State) when interest is earned on federal cash advances. Specific administrative requirements for State and local governments including school districts are outlined in Part 80 (Section 80.21(i); those for institutions of higher education, hospitals and other non-profit organizations are provided in Part 74 (Section 74.22(l)). A summary of those provisions is provided below.
- Under Part 80, State & local governments including school districts may keep interest amounts up to $100 per year for administrative expenses with any excess being returned to U.S. Department of Education, P.O. Box 979053, St. Louis, Missouri 63197-9000.
- Under Part 74, institutions of higher education, hospitals and other non-profit organizations may retain up to $250 per year in administrative expenses with any excess being returned to U.S. Department of Health and Human Services, P.O. Box 6120, Suite 1133, Rockville, Maryland 20852.
Updated 1/25/17 sm