The University of the State of New York
FISCAL GUIDELINES
FOR FEDERAL AND STATE AIDED GRANTS
Revised 12/06
CONTENTS
- Federal and State Aided Grants
Funding
Cycles
Application and Claiming Processes
Special Legislative Projects
FINANCIAL FORMS REQUIRED FOR GRANT PROGRAMS
- General Criteria
- SED Audit Procedures
APPENDICES
B. Special Legislative Project Approval Letter
- Proposed Budget (FS-10, FS-20)
- Request for Funds (FS-25)
- Proposed Amendment (FS-10-A)
- Final Expenditure (FS-10-F, FS-10-F Short Form)
The Fiscal Guidelines for Federal and State Aided Grants is intended to provide general guidance for the financial management of Federal and State grants by local agencies. Another information resource is A Guide to Grants Administration and Implementation Resources. In addition to these guidelines, projects must be conducted in accordance with applicable Federal and State laws, regulations and directives, including but not limited to:
Federal and State Aided Grants
FUNDING CYCLES
All Federal and State grant programs adhere to annual funding cycles although there are significant differences between the State and Federal funding calendars.
Federal
The Federal fiscal year runs from October 1 through September 30, although most Federal programs are "forward funded" by the Federal government and thereby made available to the states on July 1, prior to the start of the Federal fiscal year. In addition, most Federal grants are governed by carryover provisions, which extend the life of an appropriation for an additional year. Thus, most programs funded through the U.S. Department of Education have an appropriation life to 27 months.
In order to manage local projects effectively and identify expenditure and carryover funds on a local and statewide basis, Federal grants to local agencies are awarded on an annual cycle. In fact, most grants are funded on a school year basis of September 1 through August 31, although certain programs may operate on a July 1 through June 30 basis. The State also has the option to fund projects for a shorter length.
State
The State fiscal year runs from April 1 through March 31. Unlike Federal programs, State programs do not have carryover provisions unless specifically authorized by the State Legislature. While State funds may be disbursed up until August 31 following the end of the fiscal year, the limited appropriation life does impose severe restrictions on the time permitted for operation and closeout of individual projects. Thus, in order to manage State funds effectively, local grants are confined to a July 1 through June 30 cycle with the exception of Special Legislative Projects which can run through July 31 when necessary. Again, as with Federal programs, certain projects may be funded for a shorter duration within that cycle.
APPLICATION AND CLAIMING PROCESSES
Each year, applications or Request for Proposals (RFP) are developed by the responsible State Education Department (SED) program office. These documents are available on the internet and in paper form upon request to the program office.
Agencies eligible to apply for funding should read the application material thoroughly and follow all instructions contained in the application.
A proposed budget will usually be requested as part of the application process. The application will specify what budget form should be submitted, Form FS-10 or FS-20. The proposed budget should be submitted to the SED program office along with the other required information.
The SED program office reviews all of the grant application materials and notifies the applicant agency of approval or disapproval.
Following program office review and approval, a copy of the proposed FS-10 or FS-20 budget for each successful applicant is sent to Grants Finance by the program office. After the budget is processed in Grants Finance, an automatic first payment is made. The amount of the first payment may vary due to statutory, regulatory or policy requirements.
A copy of the approved FS-10 or FS-20 budget is mailed to the local agency by Grants Finance so that any changes can be noted and project accounting records established. At the same time, but under separate cover, a formal grant award notification is sent to the local agency by Grants Finance (Appendix A).
The SED program office will notify local agencies of any changes to the budget not visible on the FS-10 or FS-20 as well as any other changes or special conditions of the grant.
Subsequent budgetary changes requiring State Education Department approval should be requested through the Proposed Amendment for a Federal or State Project (Form FS-10-A). Requests for changes to approved projects should be submitted to the SED program office.
Additional payments up to 90 percent of the approved budget total are generated by submission by the local agency of the Request for Funds for a Federal or State Project (Form FS-25) to Grants Finance. It is recommended that the report be filed monthly for projects over $100,000 and quarterly for projects of $100,000 or less.
Upon completion of the project, the local agency submits an original and one copy of the Final Expenditure Report for a Federal or State Project (FS-10-F or FS-10-F Short Form) to Grants Finance unless other routing instructions have been provided. Unless explicitly directed in the application, RFP, or in writing by SED program or Grants Finance staff, the FS-10-F Short Form should be used provided the report is submitted on time. Final Expenditure Reports that are submitted after the due date should be submitted on the FS-10-F.
Grants Finance reviews the Final Expenditure Report and determines the final approved total of project expenditures. A final payment of any balance due to the local agency is then issued, or in the event the local agency has been overpaid, a transfer of these funds will be made to another project if possible or else a refund will be requested.
The State Education Department reserves the right to require the timely submission of a complete FS-10-F and any supporting documentation for monitoring or auditing purposes.
SPECIAL LEGISLATIVE PROJECTS
Special legislative projects are State funded grants which are awarded to individual local agencies in accordance with the annual State local assistance budget adopted by the New York State Legislature, and are processed and administered by:
Special Legislative Projects Coordinating Unit
New York State Education Department
Room 132, Education Building
Albany, NY 12234
Telephone: (518) 473-5733
Major differences between the approval and administration of special legislative projects as compared to other projects are as follows:
The Legislature itself, rather than the New York State Education Department, designates the recipient local agency and the purpose and amount of each special legislative project awarded.
The Special Legislative Projects Coordinating Unit notifies each designated local agency about its project award, transmits application forms for completion, and receives completed applications, amendments, requests for additional funds and final expenditure reports submitted by such agencies.
In addition to the approval of the New York State Education Department, such projects must also receive the approval of the New York State Office of the State Comptroller.
After all approvals have been obtained, a formal approval letter will be transmitted (Appendix B).
Final payments requested in accordance with the payment schedule indicated in the project application packet must always be accompanied by a final program narrative report. One signed original final expenditure report plus three copies must be submitted.
The actual grants for such projects are awarded by the Legislature throughout the school year. However, regardless of the award date, the funding dates for projects will ordinarily encompass the entire school year in which the award occurs. Any exception to the annual school year funding cycle is subject to the approval of the Office of the State Comptroller.
The funding date for an approved amendment is retroactive to the approved beginning date of the special legislative project.
If the Legislature reappropriates an individual grant for extension through the succeeding fiscal year, a local agency may then apply for a project extension through June 30 of the succeeding year.
FINANCIAL FORMS
REQUIRED FOR GRANT
PROGRAMS
Proposed Budget for a Federal or State Project - Form FS-10
and FS-20
Purpose:
To assist the local applicant agency in planning for necessary project expenditures.
To provide the State Education Department with a specific itemization of proposed project expenditures.
To provide the State Education Department and the Office of the State Comptroller with the necessary documentation upon which payments can be based.
To ensure that expenditures made by the local participant agency have the prior approval of the State Education Department.
Submittal Time:
A copy of the approved FS-10 or FS-20 will be returned to the applicant agency. In addition, a formal grant award notification is sent to the applicant agency by Grants Finance (Appendix A), and an initial payment is generated.
Request for Funds for a Federal or State Project - FS-25
Purpose:
To report expenditures on Federal or State funded projects.
To request additional payments for Federal or State funded projects.
Submittal Time:
Project Budgets Greater than $100,000 - The FS-25 should be filed at the end of each month, beginning with the first month of operation. Payment will be made based upon projected cash need for the next month.
Proposed Amendment for a Federal or State Project - Form FS-10-A
Purpose:
To request prior approval from the State Education Department for budget changes to Federal or State funded projects.
To enable both the local agency and the State Education Department to maintain an accurate and up-to-date record of approved changes in a project budget.
Submittal Time:
Special Instructions:
Final Expenditure Report for a Federal or State Project - Form FS-10-F and FS-10-F Short Form
Purpose:
To serve as the basis for a final payment to the local agency.
Which form should be used?
For grants ending prior to 8/31/05, the FS-10F was required.
Beginning with grants ending 8/31/05, unless explicitly directed in the application, RFP, or in writing by SED program or Grants Finance staff, the FS-10-F Short Form should be used provided the report is submitted on time. Final Expenditure Reports that are submitted after the due date should be submitted on the FS-10-F.
A variety of circumstances could result in SED requiring submission of the FS-10-F. Some of these circumstances include the selection of an agency or a program for detailed review as part of SED's comprehensive audit or monitoring processes, unique requirements of a particular program or the designation of an agency as "high-risk" due to non-compliance with the conditions of one or more grants.
Submittal Time:
The final expenditure reports should be prepared after all encumbrances have been liquidated.
The due date for the Final
Expenditure Report is listed on the grant award notification.
Reports for Federal projects are generally due within 90 days following the end of the project.
All State project final expenditure reports are generally due within 30 days following the end of the project.
Note that certain program managers may require an earlier submission of final expenditure reports due to unique requirements of the fund source. If this is the case, you will receive notification from the program manager. This program specific requirement supersedes the standard timeline mentioned above.
Special Instructions:
Expenditures for only one project may be reported in each Final Expenditure Report. Copies of supporting documentation such as claim forms, travel vouchers and invoices should not be sent to SED. Such documentation must be retained in the local agency project file. If it is necessary for an auditor to review this material, it will be requested.
To ensure accuracy, the Final Expenditure Report should be completed by staff of the local agency business office.
Note that all costs are to be reported in whole dollar amounts only.
A review of each Final Expenditure Report is conducted by Grants Finance to determine the final reimbursable cost of the project.
Following that review, a final payment, if due, will be processed. In the event that a local agency has been overpaid, a transfer of these funds will be made to another project if possible. If a transfer cannot be made, a refund will be requested. Refunds should be submitted only upon request.
AUDIT GUIDELINES
General Criteria
Allowable Costs
To be considered allowable for reimbursement, costs must meet the following general criteria:
Be necessary and reasonable for proper and efficient operation of the program.
Be permissible under applicable State and/or Federal laws and regulations.
Conform to any limitations or exclusions set forth in these guidelines, laws or regulations, or other governing limitations as to types or amounts of cost items.
Be the net amount after applying all applicable credits, such as purchase discounts, project-generated income, and adjustments of overpayments.
Must not be included as a cost in any other project or grant.
Local Responsibility
Records Retention
Funding Dates
Project Encumbrances
|
The encumbrance is made: |
|
|
On the date on which a binding written commitment to acquire the property is made. |
|
|
When the services are performed. |
|
|
On the date on which the agency makes a binding written commitment to obtain work. |
|
|
On the Date on which the agency makes a binding written commitment to obtain the work. |
|
|
When the agency receives the services. |
|
|
When the travel is taken. |
|
|
When the agency uses the property. |
Prior Approval
Careful attention must be given to be certain that the following expenditures are included in your budget or amendments and have received written prior approval from the State Education Department:
Equipment items having a unit value of $5,000 or more. (for 2004-05 and earlier, use $1,000 as threshold)
Material changes to personnel positions.
Minor remodeling.
An increase in a budget subtotal category (salaries, purchased services, travel, etc.) by more than 10 percent or $1,000, whichever is greater.
An increase in the total budget grant amount.
Indirect Costs (Code 90)
Indirect costs can be broadly defined as central administrative costs and certain other organization-wide costs that are incurred in connection with a project but that cannot readily be identified with the project (e.g., payroll preparation, central purchasing). The total indirect costs generated for a grant project is calculated by applying the indirect cost rate (see below) to the allowable direct cost base (modified direct cost base). These funds are used to support the central administrative costs.
The modified direct cost base is the total direct costs of a project less equipment, minor remodeling, the portion of each subcontract exceeding $25,000 and any flow through funds.
Two types of indirect cost rates are used with programs funded through the New York State Education Department:
Non-restricted Rate
Rate Computation
The procedure to compute indirect cost rates vary depending on the type of local educational agency, as follows:
Other Agencies - Local agencies other than school districts and BOCES may negotiate indirect cost rates through their Federal cognizant agency. However, in cases where a restricted rate has not been established, a local agency may use the restricted rate that is established each year by SED for other agencies.
Reimbursement of Indirect Costs
The approved rate is applied against the modified direct cost base and results in an amount available for indirect cost purposes. However, it should be noted that the maximum rate allowable for individual projects may be set by statute, regulations or may be negotiated downward by the New York State Education Department.
The amount of actual reimbursement of indirect costs is computed by applying the approved rate to actual modified direct cost base expenditures. If actual modified direct cost base expenditures are less than those budgeted, the amount of indirect cost funds reimbursed will be reduced accordingly.
School Food Services Programs
Budget and claim procedures for indirect costs in school food service programs vary by agency and program. For specific instructions regarding use of the non-restricted rate in school food service programs, contact:
Child Nutrition Reimbursement Unit
New York State Education Department
Room 409, EB
Albany, NY 12234
(518) 474-3926
Special Legislative Projects
Special Legislative Projects are frequently extended and consequently, may span several program years with differing indirect cost rates. The rate used should be the rate in effect when the project begins.
Personnel Positions (Codes 15 & 16)
Under Federal supplement/supplant provisions, no full-time person or position may be reimbursed for work under a program if employed in the same or similar position prior to the implementation of the program. Furthermore, remuneration of a regular full-time employee for work performed on Federal program activities is allowable only if:
Substantiation of Personnel Costs
While copies of payroll records should not be filed with the Final Expenditure Report, time and effort records for each individual employed in the project must be maintained at the local level. These records should include (a) name of individual, (b) title of position, (c) period of employment and (d) total amounts paid, as well as the basis for allocating costs to Federal or State projects.
Purchased Services (Code 40)
Purchased services include the hiring of personnel from outside the agency as consultants, as well as rentals, admission fees, tuition costs, telephone, repairs to equipment, and contracted services. When budgeting purchased services, include as much information as possible on the purpose of the expenditure and the cost basis. The cost basis may be an amount per day for a certain number of days or an amount per person or item.
Where there exists an employer-employee relationship between the local agency and project personnel, such personnel should not be budgeted as consultants. The existence of an employer-employee relationship is determined by the degree of control exercised by the employer. An employee is usually trained by the employer, is directed in how work is to be performed, and has a continuing work relationship with the employer. An independent consultant decides when, where and how the work is to be performed, is paid according to an agreed-upon performance or result of work and is free to contract with work for others.
Rental costs are allowable only if the local agency is renting from an outside agency or vendor. Rent cannot be charged when the local agency actually owns the space or item involved.
Unless the project necessitates the installation of separate telephone facilities, monthly service charges may not be prorated and charged as a project expense; however, toll or local usage charges specifically for project purposes are allowed.
Travel Expenses (Code 46)
Actual expenses claimed against a project are limited to the maximum amounts authorized by local participant agency policy. For agencies where such written policy does not exist, expenditures are allowed at no more than the State-approved maximum travel rates that were in effect at the time the travel occurred.
When local agencies provide their own school bus transportation for a project, reimbursements shall be limited to the approved rate per mile for operational costs. Only the salaries of individual bus drivers and monitors will be allowed in addition to such costs. The salaries should be budgeted and claimed under Code 16, Salaries for Support Staff.
Supplies and Materials (Code 45)
Purchase orders may not be issued before the approved project funding date or after the project termination date. In addition to the actual cost of each item, costs of shipment are considered part of the purchase price of such items and are eligible for reimbursement.
Internal transactions, such as supplies taken from agency stock (warehouse, supply room, etc.), should be included on the final claim. The date of the transaction or requisition date should be maintained along with any identifying data such as journal entry. Where project personnel have made cash purchases and are reimbursed, the name of the commercial vendor should be available as well as the name of the individual making the purchase.
Equipment (Code 20)
Beginning with the 2005-2006 budgets, all equipment items having a unit value of $5,000 or more with a useful life of more than one year must be reported in Code 20.
For 2004-2005 budgets and earlier years, all equipment items having a unit value of $1,000 or more with a useful life of more than one year were reported in Code 20.
All organizations must maintain an inventory of capital assets. The inventory must include, but may not be limited to, all items included in the equipment category for grant programs. The inventory listing must contain the following:
A description of the equipment, including manufacturer's model or serial number.
Identification of the grant under which the recipient agency acquired the equipment.
Acquisition date and unit acquisition cost.
Information on how the grant share of the cost was determined if the cost was shared by the recipient agency.
Location, use and condition of the equipment and the date this information was recorded.
All pertinent information on the ultimate transfer, replacement or disposition of the equipment.
Utilities
In claiming expenditures for utilities, the cost must be directly identifiable with, and attributable to, the individual project. Furthermore, the agency must provide the basis for calculating the pro rata charge of the costs to the project.
School Lunch Reimbursement Under Federal and State Programs
It is State Education Department policy not to pay for costs of any food in Federal and State aided projects in an agency which also conducts a feeding program eligible for reimbursement under the National School Lunch Act, Child Nutrition Act or Summer Food Services Program for Children. However, since the National School Lunch Act does not provide for snacks (except milk), these costs are eligible for reimbursement, if specifically approved, under most grant programs.
Fringe Benefits (Code 80)
Fringe benefit rates for Federal and State funded project staff must be the same used for other staff of the local agency. Fringe benefits may only be claimed for the salaries actually expended in the Federal or State project.
Unemployment insurance may be claimed by local educational agencies and not-for-profit agencies only if the local agency has elected either the Tax Method or the Direct Reimbursement with Special Revenue Fund options for covering these costs. Payments for direct reimbursement without a reserve fund may not be claimed. All profit-making agencies must be under the Tax Method.
New York State Sales Tax Allowance
Tax exempt agencies will not be reimbursed for New York State sales tax charges since they are not required to pay tax when purchasing supplies, equipment, etc. for the agency. Likewise, the staff of such agencies, while on official business, are also exempt from New York State Sales Tax and reimbursement will not be allowed for those charges. Other persons paid by the project, such as consultants, may be required to pay the New York State Sales Tax on purchases of food and lodging, and in such cases, are eligible for reimbursement.
Interest and Finance Charges
Interest or finance charges incurred by the local agency are not allowed for reimbursement in Federal or State aided projects.
Interest Earned
Interest earned from State and Federal grant funds received through the State does not need to be reported. However, it is expected that requests for payments of Federal and State aid through the filing of the FS-25 will be based on actual expenditure needs and that the time between receipt of such payments and their disbursement will be minimized as much as possible.
Audit Costs For Federally Aided Projects
The cost of a "single audit" performed by the participant agency's independent auditor should be recovered from indirect costs. However, in cases where an agency lacks an indirect cost rate, the pro rata share of the single audit cost may be claimed as a direct cost. Inasmuch as the performance of the audit often occurs after the project ending date, reimbursement of the audit cost, even though the independent auditor has not yet been paid, is allowable subject to the following conditions:
Final reimbursement will be based upon substantiation of the pro rata share of the audit cost, as well as any internal transactions identifying audit charges to the project.
SED Audit Procedures
Audit Correspondence
During the audit of the FS-10-F, local agencies may be notified of possible audit disallowances and given the opportunity to provide additional information. Upon completion of the audit, a copy of the audited FS-10-F will be mailed to the local agency and a final payment, if due, will be processed. If the audit results in an overpayment, the amount overpaid will be transferred to another eligible project if possible and a Notice of Overpayment (form FS-80) will be sent to the local agency (Appendix C). The notice will identify the project that was overpaid; the amount overpaid; and the project charged for overpayment, or will instruct the local agency to submit a refund check. The above procedures have been designed to inform local agencies as fully as possible of the audit findings of the State Education Department and to give those agencies adequate time to review such findings.
Processing FS-10-F Short Forms differs from the FS-10-F in that the Short Forms only report summary information. Although the short form submissions are not subjected to the same level of audit, the reported expenditures are compared to the approved budgeted amounts by category of expenditure. Based on this limited review, adjustments are made to the final approved project totals. Processing the final payment or overpayment will follow the same procedures as described above for the FS-10-F.
The Department reserves the right to request at any time, the timely submission of a complete FS-10-F and supporting documentation for monitoring or auditing purposes.
Reopening of Audits
Once a project has been audited and closed, the local agency is allowed 90 days to reopen a project for further review. Requests should be submitted in writing to Grants Finance. If no request for additional review is made within this period, the audit findings are considered final. However, the State Education Department reserves the right to reopen a project after it has been closed to either recover any unallowed costs or reimburse any additional costs that have been disclosed through separate audits or reviews.