FS-25 Payments for Federal and State Grants
This is to inform local agencies of a policy change in the use of form FS-25 Request for Funds and to provide additional guidance regarding requirements that must be met in order to receive funds for anticipated expenditures using form FS-25.
United States Department of Education General Administrative Regulations (EDGAR), parts 74 and 80, stipulate that local agencies:
- may only request as much cash as is necessary to meet the immediate needs of a grant project; and
- must minimize the time between receipt of the funds and disbursing them for grant activities.
In New York State, these requirements also apply to grants made with State funds.
The State Education Department (SED)’s Grants Finance Office has reviewed its cash payment policy and procedures for consistency with federal cash management expectations. As a result, SED is changing its policy for processing the FS-25 form for grants with budget totals of $100,000 or less.
Current policy allows local agencies to request payment depending on the total amount of the approved budget. Under current policy, those with grant budgets totaling $100,000 or less may request payment for actual expenditures to date plus anticipated expenditures on a quarterly basis and those with grant budgets totaling more than $100,000 may request payment on a monthly basis.
Effective July 1, 2009, SED will no longer make payment on anticipated expenditures for the next quarter, regardless of the size of the grant. Only requests for funds including actual expenditures to date plus anticipated expenditures for the next month will be accepted. Payments totaling up to 90% of a grant’s budget may be requested through this process.
There are a small number of grant programs for which payment may only be made on a reimbursement basis and therefore do not permit payments for anticipated expenditures. For-profit organizations are also paid on a reimbursement basis, regardless of the grant program. In addition, any local agency identified as having a cash management system that is not in compliance with federal regulations may be limited to payments on a strictly reimbursement basis. The policy change eliminating quarterly cash requests for anticipated expenditures does not apply to or change the conditions under which funds are normally paid on a reimbursement basis.
For those grant programs that permit payment on anticipated expenditures, payments are allowed only when a local agency can demonstrate willingness and ability to maintain appropriate procedures that minimize the time between the receipt and the disbursement of grant funds. To meet that requirement, local agencies are strongly urged to:
- coordinate the timing of cash requests closely with internal approvals for payment, so that cash received from SED does not stay in a bank account for an extended period of time;
- pay out grant funds for project activities as soon as possible after receiving cash from SED;
- plan carefully for cash flow during the budget period and review project cash requirements before each drawdown; and
- monitor cash receipts and payments regularly.
Grants Finance has revised the FS-25 Request for Funds form to reflect this change. If you have any questions regarding the policy change or cash payments in general, please contact Grants Finance.