After a grant has been awarded, either as an entitlement or through a competition, it is the responsibility of grant recipients to ensure that it is implemented in compliance with any applicable programmatic requirements. In the administration of grants, recipients must use fiscal controls and fund accounting procedures that will ensure proper disbursement of, and accounting for, grant funds received under any funding award. (See Appendix O for checklist of standards for financial management systems.) What follows are the standard procedures to be used when requesting funds, making amendments, and final reports on grants.
In accordance with state finance regulations, grant recipients can only expend funds from the date their grant was entered as approved into the Department's Grant Management system. This means that if a district wishes to expend grant funds as of a certain start date, the grant must have completed a programmatic review, and been submitted as approved to Grants Management prior to that start date. Districts may not use local funds to cover initial costs for a grant prior to receiving official approval from the Department, with the intent to reimburse themselves after receiving the award notice. Audit exceptions may be taken for any grant funds used for periods not covered by the award letter, leading to districts needing to pay back the misused grant funds.
For example, districts that wish to begin expending grant funds as of September 1,are advised to:
The Department will develop a standard process of informing the Superintendent of any contacts made to the identified local contact person to insure that the district is informed of any possible delays in the approval process.
Due to the federal "partial advance funding" practice which can impact the major entitlement programs including, Titles I, II-A, special education (IDEA), and Perkins grant programs, the Department will receive an initial FY award letter in July from the United States Department of Education (USED) authorizing the distribution of a portion of each federal grant through September 30, of that year. The Department will receive a second award letter for the balance of the allocations in early October.
Should you have any questions regarding this, please contact the Grants Management payment office, (781) 338- 6572.
Request for Funds Process — Effective 7/1/2007
As shown in the Flow Chart , once grants are approved and deemed technically correct, the Grants Payment unit will complete the process to generate an initial payment authorization by the State Comptroller. The payments for grants are determined based on the following standard allotment schedule.
|Up to $5,000|
- Full payment with initial award
|$5,001 or more|
- All grants will receive an initial payment automatically upon approval, the amount to be determined by the total grant award divided by the number of months in the grant duration.
- Subsequent payments must be requested on a monthly basis.
Upon approval, a Payment Notification (See Appendix E.) is generated and sent to the authorized signatory and the listed 'control user' for each grant. This notice provides important basic information about the grant, such as the project number, project duration, approved grant total amount, and amount of the initial payment.
The initial payment is the only one that is sent to recipients automatically. To ensure that funds are distributed on an "as needed" basis in accordance with both state and federal cash management requirements, the balance of funds must be requested according to the above schedule.
Form RF1 for requesting funds through an on-line process has been developed to document the Department's distribution of funds on an "as needed" basis. (See Appendix F.) The requests should be based, as much as possible, on actual expenditures, rather than what is obligated. Unexpended monthly balances should not exceed 10% of funds received to date. It is incumbent upon grant recipients to observe their expenditures closely and submit their RF1 forms within the designated timeframe, usually the last two weeks of the month, for requesting cash advances. Grant recipients may make requests in excess of the allotment schedule but must include a justification explaining the need for additional funds and additional documentation may be required.
By submitting a request the grantee certifies that the request is in compliance with the "Cash Management Act" (31CFR part 205) and EDGAR regulations (34 CFR part 80.20 and 80.21), which allow for cash advances provided grantees maintain procedures to minimize the time elapsing between the receipt and disbursement of grant funds. Additionally, the grantee certifies that the obligations incurred under this project for which funds are requested, were made within the period of availability (project duration) stated in the grant award notice. The grant records in support of each request must be in sufficient detail to properly substantiate all claims for payment and expenditures made under the grant. Although these grant records are not required to be submitted with each monthly request, they must be available for inspection by Department staff at any time.
Adjustments to grant payments are made in the final payment. For example, the amount of money Grants Management sends directly to the Massachusetts Teachers Retirement System (MTRS) on behalf of school systems is deducted from the final payment on their federally-funded grants.
In general, grants are awarded for a period of one school year at a time. Because of differences in the state and federal fiscal years, there will be differences in the grant duration between state and federal grants. Typically, a state funded grant will have a start date in July or August, with an end date of the following June 30th, which is the end of the state fiscal year.
Most federal grants will more closely follow the federal fiscal year (October 1, to September 30), and usually start September 1, and end the following August 31. Regardless of the funding source, the final payment on all grants must be requested before the end of the state's accounts payable period, which is August 31. In the month(s) before the accounts payable deadline, Grants Management will send notice to all grantees with remaining unclaimed funds reminding them that failure to claim in time may result in the loss of those funds.
For Federally-funded Grants Only
|Each year on December 31, 80% of the money budgeted for MTRS in line 4 of federal grants is sent directly by Grants Management to MTRS (Appendix J).|
Amendments are required when:
- there is any significant change in program objectives; or
- there is any increase or decrease in the total amount of the grant; or
- an increase in a line of the budget exceeds $100 or 10% of the line (whichever is greater), or exceeds $10,000.
Amendments are not required when:
- there is no significant change in program objectives;
- there is no increase or decrease in the total amount of the grant; and
- an increase in a line of the budget is less than or equal to $100 or 10% of the line (whichever is greater), and does not exceed $10,000.
When it is determined that an amendment is required, the grant recipient should fill out the standard amendment form (Form AM1, Appendix G),attach revised budget pages and submit it to the appropriate program liaison. After the amendment request is submitted, the following review and approval process takes place.
- Program staff conduct a programmatic and technical review.
- The authorized representative of the Department signs the amendment as approved.
- A signed copy of the approved amendment is sent to the grant recipient by the approving authority.
- The approved amendment is submitted to Grants Management for technical review.
- Review staff notify the Department staff person who approved the amendment of any technical problems.
- When the amendment is technically correct, the revised budget is entered into the computer in Grants Management and the amendment is filed in the project folder. Amendments should be submitted at least thirty (30) days prior to the desired change and must be submitted thirty (30) days before the conclusion of the project. The maximum number of amendments to any grant may not exceed two. Exceptions to this limit may be allowed based on sufficient justification as determined by the appropriate and responsible approving authority in the Department.
In preparing an amendment for submission, the following checklist should be consulted:
- Is the project number correct?
- Does the justification make sense?
- Has the amendment request been submitted prior to the desired change and 30 days before the conclusion of the project?
- Are the revised budget pages attached?
- Are the revised budget pages correct? (Note: The revised budget pages should be completed with the same care as the original budget pages since they now become the official project budget.)
- For federally-funded grants only, if salaries for teachers who are members of MTRS are increased, is the MTRS sub-line under fringe benefits increased accordingly? If salaries are reduced on an amendment submitted after November 1, is the MTRS sub-line reduced by an amount that does not exceed 80% of the amount budgeted as of October 31? (If yes, recipients should contact Grants Management immediately for additional instructions.)
- Does each line in Column A on the AM1 form equal each corresponding line on the originally approved budget?
- Does Column C balance out? (Do the pluses equal the minuses or does Column C equal the amount of increase or decrease requested)?
- Does each line in Column D equal the corresponding line item totals listed on the revised budget pages?
- Does each line in Column D equal the corresponding line in Column A plus the corresponding line in Column C or the corresponding line in Column A minus the corresponding line in Column C?
Final Reporting Process
At the conclusion of grant activities, recipients must submit a final financial report to the Department, accounting for the expenditure of funds received. Grants Management has developed an online process and standard form (FR1) for collecting this information. (Please review the Powerpoint Presentation Appendix H.) The FR1 form should be submitted to Grants Management within sixty (60) days of the end date of the grant. Grant recipients should file their reports after carefully reconciling all figures with their city auditor, town accountant, or agency business manager.
Grants Management checks these reports to ensure that the expenditure of funds for each line item corresponds to the amount budgeted for that line. Note that over-expenditures that fall at or below the $100, 10% or $10,000 line item increase thresholds specified in the Department's amendment policy will be allowed and the final report will be filed. Increases in line items, without approved amendments, that exceed these thresholds, will be subject to possible audit exceptions and the required return of any funds that were expended inappropriately.
For Federally-funded Grants Only
The Department has developed an additional form (Form FR1 A, Appendix I) to aid in reconciling expenditures for MTRS. This form can be used to assist in calculating the additional MTRS liability beyond the 80% of the budgeted MTRS amount the Department pays directly to the MTRB for any federal project containing funds budgeted and paid for the salaries of staff who are members of MTRS.
When the additional liability is calculated by subtracting the amount paid directly by the Department to MTRS from actual liability, this amount should be paid to MTRS. No checks for this add additional MTRS liability should be sent to The Department of Elementary and Secondary Education.
Unexpended Funds and Preliminary Expenditure Review
Grants from the Department are generally awarded for a period of one fiscal year at a time. For all grants, unexpended funds must be returned with the Final Financial Report (FR-1) each year. For grants funded with state money, unexpended amounts must be returned to Grants Management and these funds revert to the state at the conclusion of the fiscal year and cannot be reused. Unexpended amounts of $1.00 or less do not have to be returned. For all grants, the FR-1 and any unexpended funds must be submitted to Grants Management within sixty (60) days of the end date of the grant.
Most federal grants contain a provision known as the Tydings Amendment, which means that the funds are awarded to the state for use within a 27-month period. For grants funded with federal money, the Department currently has two different methods of ensuring that funds are expended within a twenty-seven month period so that money that has to be returned to the federal government is kept to a minimum.
Return of unexpended funds
Although the expectation is that grantees will fully expend grant funds within the year they are awarded, the Tydings Amendment provides flexibility to sub grantees for most federal entitlement programs such as NCLB Fund Codes: 140, 180, 305, and IDEA 240. The Amendment allows recipients to reapply for any returned funds as an extended use (carryover) grant. In such cases, the program office will issue guidance to recipients as to the procedures they must follow for this reapplication. Recipients should contact the program office if they are unsure whether or not a particular grant allows this reapplication process.
Title I Policy
Currently, the Title I-305 program has a specific carryover limitation within the program regulations. This means that for these grants, recipients with unexpended balances, within certain limits, retain access to those funds for the remainder of the Tydings period. Title I limits the amount a recipient may carry over to 15% of the original entitlement. If the amount of carryover exceeds this limit, a waiver is usually required in order to retain access.
Title III Policy:
In the case of Title III grants (fund code 180); the grant period is stated in the Request for Proposals (RFPs). The Title III grant is for support of programs for students with limited English proficiency, and the data used to determine the allocations for this special population are often delayed at the start of the grant cycle, but most grants to districts are still usually in place by the start of the regular school year (September 1st). Carryover is permitted; however, grantees must return to DESE any funds that are not expended within the stated grant period. Upon return of the funds, districts may reapply for the funds for the following year, consistent with Title III and Department guidelines and timelines.
Pursuant to Section 3114(c) of the ESEA, when Title III funds allocated to a grantee under that section are not or will not be used by the grantee for the purpose for which the allocation was made, DESE will reallocate the funds to other eligible entities in the State that DESE determines will use the amount to carry out Title III purposes. DESE will prioritize the reallocation of these funds to Level 3 and Level 4 districts based on the needs of district LEP and immigrant students, as determined by ESE. DESE reserves the right to determine the criteria for re-allocating Title III funds in this regard.
Perkins Vocational Ed Program Policy
For the Perkins (Fund Code: 400) Vocational Education grant, the program regulations do not allow carryover and for most non-entitlement programs, the returned funds are tracked in terms of their fiscal year but they are no longer considered as belonging to a particular school or district. They simply become part of the pool of old money available to the Department for redistribution. Each program has its own requirements governing how these funds are reallocated within the remainder of the 27 month Tydings period.
As with all grants, the FR-1 and any unexpended funds must be submitted to Grants Management within sixty (60) days of the grant end date.
Preliminary Expenditure Review
Although it is sometimes unavoidable that grant funds are drawn down but not expended, grantees are reminded again of the importance of close monitoring of grant expenditures and maintaining compliance with the "cash management" requirements cited above, and are only drawing funds on an as needed basis.
Many recipients of federal carryover grants often plan to limit spending in a current grant year in order to have carryover funds available to cover possible shortfalls the next year. Because of the extended time lag of 60 days (or longer) from the end date of a grant, through submission of the final report and return of funds, and submission of a carryover grant application, grantees usually lose a significant amount of the Tydings time for use of those funds.
In an effort to reduce this lag time, as well as assist in generating more timely and accurate final reports, the Department strongly recommends that grantees conduct A Preliminary Expenditure Review. The intent is to encourage recipients to review grant expenditures within a timeframe (April/May) that allows for a reasonably early determination of which grants will end with an unexpended balance that will have to be returned.
At this point in the grant's lifecycle, a reduction amendment will be required to be submitted for certain carryover grants, to reduce the grant by the projected unexpended amount. For all those grants that allow for some form of carryover, reducing the current grant total by the carryover amount in advance will free those funds for access at the start of the next year's grant cycle, rather than several months into the new school year. Such a reduction will also lessen the likelihood of grantees unnecessarily drawing down funds, and creating a possible cash management violation.
Due to restrictions within the Massachusetts state accounting system, any such reduction amendments must be approved (by the appropriate program unit) and submitted to Grants Management no later than May 15theach year. Amendments submitted after that date may not be processed in time to change the original grant encumbrance.
All grants, whether carryover eligible or not, would benefit from the preliminary expenditure review, and if appropriate, submission of a reduction amendment to eliminate the need to return funds that clearly will not be used by the end date of the grant.
Evaluating grant programs is an important tool in helping to improve the quality of programs, and a number of federally funded grant programs require that evaluations be conducted on a regular basis. In general, grant programs should be evaluated in accordance with the program design and complexity. The overall purposes of evaluation are to:
- guarantee the program's compliance with federal and state law, regulation, and policy;
- provide the administrators and staff of a grant program with appropriate feedback in order to improve performance (formative evaluation — conducted during the course of a grant);
- assess the extent to which the grant program actually achieves its objectives as stated in a grant application (summative evaluation — conducted when the grant has been completed);
- identify exemplary grant programs or exemplary components of grant programs for appropriate dissemination.
Auditing is another management tool for evaluating whether operations are executed economically, efficiently, and effectively. Audits of grant programs should be conducted on a regular basis. For most recipients of federal funds, the audit requirements will be satisfied by the federal "Single Audit" conducted each year. Be advised that recent changes to the Single Audit Act (31 U.S.C. 7501 et seq. as amended) have raised the threshold which triggers the audit of federal funds from $25,000 to $500,000 or more in federal dollars received from all sources and expended in a given fiscal year.
This change will mean that many recipients (those who receive less than $500,000 total federal dollars from all sources), will not be required to have a Single Audit done each year, although they may still be subject to an audit under state regulations. All recipients, however, are required to maintain for purposes of audit or review, records, books, reports and any other data pertaining to a grant award for a period of seven (7) years, beginning on the first day after the final payment is received for that award. These books and records must be in sufficient detail to properly substantiate all claims for payment and expenditures made under the grant.