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Ensuring Allowability Under 21^st CCLC Programs

Tiffany Kesslar, Esq.

tkesslar@bruman.com

www.bruman.com

August 2024

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What Rules Apply to Grants Management?

Part 75 - Direct Grant Programs

Part 76 - State-Administered Programs

Part 77 - Definitions

Part 81 - Enforcement Regulations

EDGAR

(34 CFR)

Subpart A – Acronyms and Definitions

Subpart B – General Provisions

Subpart C – Pre-Federal Award Requirements

Subpart D – Post Federal Award Requirements

Subpart E – Cost Principles

Subpart F – Audit Requirements

UGG

(2 CFR Part 200)

ESEA, Title IV, Part B

Draft USDE Guidance https://oese.ed.gov/files/2023/10/21st-cclc-non-reg-draft-guidance-updated-10-19-2023.pdf

21^st CCLC Statute

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Mandatory Disclosures – 200.113

Mandatory disclosures (200.113): Applicant, recipients, and subrecipients must promptly disclose whenever it has credible evidence of the commission of a violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations under Title 18 or Civil False Claims Act (31 U.S.C. 3729–3733)

Includes both criminal and civil false claims actions
Must be made in writing to the Federal agency, the agency’s Office of Inspector General, and the pass-through entity (if applicable)
Also required to report matters to recipient integrity and performance (i.e. SAM and FAPIIS)

Includes any activities or subawards in connection with the Federal award
Failure to report can result in remedies for noncompliance (200.339)

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New Whistleblower Protections – 200.217

An employee of a recipient or subrecipient must not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing information that the employee reasonably believes is:

Evidence of gross mismanagement of a Federal contract or grant,
A gross waste of Federal funds,
An abuse of authority relating to a Federal contract or grant,
A substantial and specific danger to public health or safety, or
A violation of law, rule, or regulation related to a Federal contract (including the competition for or negotiation of a contract) or grant.

The recipient and subrecipient must inform their employees in writing of employee whistleblower rights and protections under 41 U.S.C. 4712.

Recommendation: add to policies and procedures!

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Audit Requirements – 200.501

Single audit required when an entity expends $1,000,000 or more in total Federal funding during a single fiscal year

Major Programs (200.518)
Auditors must report material weaknesses in internal controls or questioned costs greater than $25,000 (200.516)
2024 Compliance Supplement: 2024 Compliance Supplement – 2 CFR Part 200 Appendix XI (May 2024) (whitehouse.gov)

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Financial Management

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Required Financial Certifications – 200.415

New (b): Subrecipients under the Federal award must certify to the pass-through entity whenever applying for funds, requesting payment, and submitting financial reports:

“I certify to the best of my knowledge and belief that the information provided herein is true, complete, and accurate. I am aware that the provision of false, fictitious, or fraudulent information, or the omission of any material fact, may subject me to criminal, civil, or administrative consequences including, but not limited to violations of U.S. Code Title 18, Sections 2, 1001, 1343 and Title 31, Sections 3729-3730 and 3801-3812.”

This paragraph applies to all tiers of subrecipients

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Financial Management – 200.302 (b)

(b) Other recipients and subrecipients:

Identification in accounts
Financial reporting
Accounting records (financial obligations)
Internal controls

Should align with “Green Book” or COSO Integrated Framework (200.303(a)) https://www.gao.gov/greenbook

Budget control
Written procedures for federal payment
Written procedures for determining allowability

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Internal Controls – 200.303

MUST:

Establish, document, and maintain internal controls
Comply with requirements (including U.S. Constitution)
Evaluate and monitor compliance
Take prompt action to correct noncompliance
Take reasonable cybersecurity and other measures to safeguard information including personally identifiable information (PII) and other types of information

This also includes info the federal agency or pass-through designates as sensitive or info the recipient/subrecipient considers sensitive and is consistent with laws regarding privacy and responsibility over confidentiality

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Federal Payment – 200.305(b)

Must minimize time elapsing between draw down and disbursement
Must maintain written procedures to implement requirements of § 200.305 (per § 200.302)

Advance Payments

Limited to minimum amounts needed to meet immediate cash needs
Subject to cash management requirements

Reimbursements

Federal agency or pass-through must make payment within 30 calendar days after receipt of the payment request
Initial payments made with state/local funds

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Federal Payment – 200.305(b)(cont.)

Cash advances must be maintained in insured accounts
Accounts must be interest-bearing unless one of the following applies:

Aggregate Federal awards under $250,000
Account not reasonably expected to earn in excess of $500 per year
Bank requires minimum balance so high, that such account is not feasible
A foreign government or banking system prohibits or precludes interest-bearing accounts
An interest-bearing account is not readily accessible (for example, due to public or political unrest in a foreign country)

All other Federal funds must be returned to the payment system of the Federal agency. Follow the instructions provided by the Federal agency.

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Program Income – 200.307

Given significant compliance requirements around program income, NCDPI does not permit subgrantees to collect funds for participation or to generate program income!

Consistent with 21^st CCLC Guidance!

USDE 21^st CCLC Guidance

Students attending Title I schools (including schoolwide schools) are “likely not able to pay a fee, however nominal”
Discusses that fees are program income that require prior approval from USDE through the SEA.
https://oese.ed.gov/files/2023/10/21st-cclc-non-reg-draft-guidance-updated-10-19-2023.pdf

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Allowability and Timely Spending

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Obligate/Liquidate Funds

Period of performance (200.1; 34 CFR Part 77 Definitions)

Time interval to obligate funds - between the start and the planned end date of a Federal award, which may include one or more funded portions, or budget periods.

Closeout & Liquidation (200.344)

(a) Federal agency or pass-through must close out the award when it determines that all administrative actions and required work of the Federal award have been completed
Subrecipeint has 90 days to liquidate (or an earlier date as agreed upon by the pass-through entity and subrecipient).

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When do costs obligate? 34 CFR 76.707

Type of Cost	Date of Obligation
Acquisition of real or personal property	On the date on which the State or subgrantee makes a binding written commitment to acquire the property
Personal services by an employee	When the services are performed
Personal services by a contractor	On the date on which the State or subgrantee makes a binding written commitment to obtain the services
Performance of work other than personal services	On the date on which the State or subgrantee makes a binding written commitment to obtain the work
Travel	When the travel is taken

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Basic Factors of Allowability - 200.403

To be allowable, a cost must:

Be necessary, reasonable and allocable
Comply with the cost principles and Federal award
Be consistent with policies and procedures applying uniformly �to Federal and non-Federal activities and costs
Be consistently treated as either direct or indirect costs
Be determined in accordance with GAAP
Not be included or used to meet cost sharing / match requirements
Be adequately documented
Administrative closeout costs may be incurred until due date of the final reports. All other costs must be incurred during the approved budget period

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Selected Items of Cost Examples

Alcohol - 200.423 (Not allowable)

Entertainment and Prizes - 200.438

Entertainment costs. Costs of entertainment, including amusement, diversion, and social activities are unallowable unless they have a specific and direct programmatic purpose and are included in a Federal award.

Field trips are allowable if it will further their academic enrichment and align to the goals and objectives of the program. The costs must be reasonable and necessary for implementing the program. 2024 Draft 21^st CCLC Guidance (E-10)

Prizes. Costs of prizes or challenges are allowable if they have a specific and direct programmatic purpose and are included in the Federal award.

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Advertising and Public Relations – 200.421

Allowable for programmatic purposes including:

Recruitment of personnel
Procurement of goods and services
Disposal of materials
Program outreach (e.g., recruiting project participants)
Public relations (in limited circumstances)

Costs of promotional items and memorabilia are not allowable
Costs of advertising solely to promote the recipient/subrecipient are not allowable

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Food?

Many current 21st CCLC programs are eligible to receive funds through the U.S. Department of Agriculture (USDA) Food and Nutrition Service for “After-school Snacks,” and in some cases to provide supper to young children.

2003 21^st CCLC Guidance (pg.9)

Subgrantees are encouraged to participate in the USDA Food and Nutrition Service programs that provide meals and snacks to students and families outside of the school day.

However, there may be times when students and families are participating in 21st CCLC programs during normal meal or snack times and food is not otherwise available.
For example, it may be necessary to provide dinner during a parent engagement activity that is scheduled during the early evening hours to encourage participation. Allowable if reasonable, necessary, and allocable under the Uniform Guidance.
2024 Draft 21^st CCLC Guidance (E-11)

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Participant Support Costs – 200.1

Participant support costs are allowable.

Direct costs that support participants and their involvement in a Federal award, such as stipends, subsistence allowances, travel allowances, registration fees, temporary dependent care, and per diem paid directly to or on behalf of participants (200.1).

Must be identified and defined in your policies and procedures!

Who is a Participant?

An individual participating in or attending program activities under a Federal award, such as trainings or conferences, but who is not responsible for implementation of the Federal award
DOES NOT INCLUDE: Individuals committing effort to develop or deliver the program including consultants, project personnel, or staff members

Examples of participants: community members, students, or conference attendees

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Travel - 200.475

Travel costs may be charged on actual cost basis, a per diem or mileage basis or a combination of the two, provided the method used is applied to an entire trip and not selected days of the trip

The method used must be consistent with state/local activities and established written policies

Travel charges must be consistent with entity’s established written policies

Must also document and justify that participation of an induvial is necessary for the federal award and costs are reasonable and consistent with written policies

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Time and Effort Reporting

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What is time and effort? 200.430(i) (g)

In order for employees’ salaries to be allowable, must have time and effort documentation!!

Employees paid with federal funds, in whole or in part, must maintain documentation of time worked

Includes: Full time and part time employees, Federal stipends that are considered salary expenses, Substitute teachers (if employees), etc.
Includes: Any employee whose salary is used to meet a match/cost share requirement (includes state, local, private funds)
Does not apply to contractors

Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed

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Documentation Standards – 200.430(g)

Documentation must…

Be supported by a system of internal controls which provides reasonable assurance charges are accurate, allowable and allocable;
Be incorporated into official records;
Reasonably reflect total activity for which employee is compensated;
Encompass all activities (federal and non-federal);
Comply with established accounting polices and practices; and
Support distribution among specific activities or cost objectives.

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Reconciliation

All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated

Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes if:

Produces reasonable approximations
Significant changes to the related work activity are identified in a timely manner
Internal controls in place to perform periodic after-the-fact reviews of interim charges based on budget estimates (200.430(g)(1)(vii)(C))

Final charges must be accurate

Reconciliation may occur at end of the fiscal year or during intervals throughout the year

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Noncompliance – 200.430(g)(8)

Unallowable costs and possible repayment of funds!

Fines and penalties: unallowable with federal funds (200.441)

ED may require personnel activity reports (PARs), including prescribed certifications or equivalent documentation that support the records as required in this section

PARs are not defined!

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Procurement

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General Procurement Standards - 200.318

Written procurement procedures (200.318(a))
Must maintain contractor oversight to ensure contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders

Includes ensuring that your procurement process only awards contracts to responsible contractors

Avoid acquisition of unnecessary or duplicative items
Maintain records of each procurement transaction
Resolve contractual and administrative disputes arising from transactions

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Conflicts of Interest – 200.318(c)

Maintain written standards of conduct covering conflicts of interest actions of employees engaged in the selection, award, and administration of contracts
A conflict of interest arises when any of the following has a financial or other interest in the firm selected for award:

Employee, officer, agent, or board member
Any member of their immediate family
Their partner
An organization which employs, or is about to employ, any of the parties indicated herein or has a financial or other interested in or tangible personal benefit from an entity considered for a contract

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Conflicts of Interest – 200.318(c) (cont.)

No employee, officer, agent or board member may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors
However, recipients and subrecipients may set standards for when the financial interest is not substantial or gift is an unsolicited item of nominal value

Nominal value??

Standards of conduct must include any discipline actions to be applied in the event of any conflict of interest violation
Conflicts of interest (200.112): Recipients and subrecipients must disclose in writing any potential conflict of interest to the federal awarding agency or pass-through in accordance with federal awarding agency’s conflicts policies

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Organizational Conflict – 200.318(c)(2)

If the recipient or subrecipient has a parent, affiliate, or subsidiary organization that is not a State, local government, or Indian Tribe, the recipient or subrecipient must also maintain written standards of conduct covering organizational conflicts of interest.

Organizational conflicts of interest mean that because of relationships with a parent company, affiliate, or subsidiary organization, the recipient or subrecipient is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization.

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Competition – 200.319

All procurements transactions under the Federal award must be conducted in a manner that provides full and open competition consistent with the procurement standards

Competition is the rule; noncompetitive procurements are only allowable in limited circumstances under 200.320(c)

To ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, or invitations for bids must be excluded from competing on those procurements

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Methods of Procurement – 200.320

Informal procurement methods

Micro-purchases (up to $10,000)
Small purchase procedures (Simplified acquisition procedures) – Over $10,000 up to $250,000

Formal procurement methods – over $250,000

Sealed bids
Competitive proposals

Noncompetitive procurements – Exception required

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Informal Procurement: Micro-purchases – 200.320(a)(1)

When aggregate amount of the procurement transaction does not exceed the micro-purchase threshold set in the Federal Acquisition Regulations (FAR): currently $10,000

Purchase cards may be used for micro-purchases

To the extent practicable, should distribute micro-purchases among qualified suppliers
May be awarded without soliciting competitive price or rate quotations if recipient or subrecipient considers price reasonable based on research, experience, purchase history, or other information; and maintains documents to support its conclusion

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Informal Procurement: Simplified Acquisitions – 200.320(a)(2)

When aggregate dollar amount of procurement transaction is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold: Currently $250,000

Recipient or subrecipient may lower the threshold based on internal controls, an evaluation of risk, and its documented procurement procedures

Price or rate quotations must be obtained from an adequate number of qualified sources. Unless specified by the Federal agency, may exercise judgment in determining what number is adequate

Up to recipients and subrecipients to determine how many price or rate quotes must be obtained

This number should be written in your policies and procedures.

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Formal Procurement Methods – 200.320(b)

Required when value of procurement is over the simplified acquisition threshold ($250,000 in the FAR or a lower threshold if applicable)
Requires competition and public notice
Includes sealed bids and competitive proposals

Contract Cost and Price Analysis (§ 200.324)

For procurements over $250,000
Develop your own estimates before receiving bids/proposals
Removes requirement to negotiate profit separately from price

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Noncompetitive Procurements – 200.320(c)

Appropriate only when:

The aggregate amount of the transaction is under the micro-purchase threshold
The procurement transaction can only be fulfilled by a single source
There is a public emergency for the requirement that will not permit delay resulting from providing public notice of a competitive solicitation
The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the federal agency or pass-through entity provides written approval, or
After soliciting several sources, competition is determined inadequate

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Contracting with Small, Minority, Women’s, or Veteran-Owned Businesses – 200.321

When possible, should consider small businesses, minority businesses, women’s businesses, veteran-owned businesses, and labor surplus area firms (see DOL’s list)
Consideration means:

Including these businesses on solicitation lists
Soliciting whenever deemed eligible as potential sources
Dividing separate procurements and establishing delivery schedules to permit maximum participation
Use orgs like the Small Business Administration and the Minority Business Development Agency of the Department of Commerce
Requiring contractors under a federal award to apply these conditions to subcontracts

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Suspension And Debarment – 200.214; 180.300; 200.216

For contracts over $25,000, you must verify that the person with whom you intend to do business is not excluded or disqualified.

Prohibition on certain telecommunications and video surveillance services or equipment

This MUST be done by one of the following:

Checking SAM.gov
Collecting a certification from that person
Adding a clause or condition to the covered transaction with that person

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Other Procurement Rules

200.319(c) – Prohibition on using geographic preferences removed (starting July 1, 2025)
200.322 – Domestic Preference for Procurement

“To the greatest extent practicable” must provide a preference for the purchase of goods and materials produced in the U.S.

200.327 - Contract Provisions

Applicable provisions in Appendix II to the UGG must be included in all contracts procured with federal funds

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Property Standards

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Property Thresholds

Equipment: tangible, non-expendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 ($10,000) or more per unit

Supply: All tangible personal property other than equipment

Computing Devices: If less than $5,000 ($10,000) per unit, defined as supplies

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Equipment Use – 200.313(c)

Equipment must be used in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award
Equipment must be available for shared use, provided such use will not interfere with the purpose for which it was originally acquired, and it follows this order of preference:

First by other programs from same agency
Then open to other Federal programs
Non-Federal programs, provided such use will not interfere with the purpose for which it was originally acquired

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Inventory Procedures – 200.313(d)

Property records

Description, serial number or other ID, source of funding (including FAIN), title, acquisition date and cost, percent of Federal contribution, location, use and condition, and disposition date including sale price
Must update property records when there is a change in status of the property

Physical inventory at least every two years (or more often, if required by State or your own policies)
Control system to prevent property loss, damage, theft. All incidents must be investigated and reported to the Federal agency or pass-through entity.
Regular maintenance procedures in place
If authorized or required to sell property, proper sales procedures to ensure highest return

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Equipment Disposition –200.313(e) and (f)

When property is no longer needed in any current or previously Federally-funded supported activity, must request disposition instruction from the Federal agency or pass-through entity.
Disposition will be made as follows, in accordance with Federal agency or pass-through entity disposition instructions:

Fair market value more than $5,000 ($10,000) (per unit) = pay Federal share back to federal agency or pass-through entity

May retain $500 ($1,000) to cover expenses associated with the selling and handling of the equipment.

Fair market value of $5,000 ($10,000) or less (per unit) = no money owed back to feds

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Supplies – 200.314

Title to supplies acquired under the Federal award will vest upon acquisition in the recipient or subrecipient.
If there is a residual inventory of unused supplies at the end of the period of performance exceeding $5,000 ($10,000) in total aggregate value, and the supplies are not needed for any other Federal award, the State or LEA may retain or sell the supplies.

Unused supplies means supplies that are in new condition, not having been used or opened before. The aggregate value of unused supplies consists of all supply types, not just like-item supplies
Must pay back the proportionate share to federal govt. Retain $1,000.

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Record Keeping

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Methods of Collection, Transmission and Storage of Information – 200.336

When practicable, the Federal agency or pass-through entity and the recipient or subrecipient must collect, transmit, and store Federal award information in an open file, non-licensed, and machine-readable formats
Recipient or subrecipient may substitute electronic versions of original paper records through duplication or other forms of electronic conversion, provided that the procedures are subject to quality control reviews

Quality control reviews must ensure that electronic conversion procedures provide reasonable safeguards against alteration of records and assurance that records remain in a format readable by a computer system

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Access to Records- 200.337

The Federal agency, or pass-through entity, Inspectors General, the Comptroller General of the United States, or any of their authorized representatives, must have the right of access to any records of the subrecipient or recipient pertinent to the Federal award to perform audits, execute site visits, or for any other official use
This right also includes timely and reasonable access to the recipient’s and subrecipient’s personnel for the purpose of interview and discussion related to such documents or the Federal award in general

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Required Written Policies and Procedures

Conflicts of Interest Policy – 200.318(c)
Accounting Policies – 200.306(h)(2)(i); 200.400; 200.430(i)
Time and Effort Policies and Procedures – 200.430(a)
Fringe Benefits Policies – 200.431
Employee Health and Welfare Policies – 200.437
Travel Reimbursement Policy – 200.475(a)

Written Allowability Procedures – 200.302(b)(7); 200.403(c)
Written Cash Management Procedures – 200.302(b)(6) and 200.305
Written Procurement Procedures – 200.318(a), 200.319(d), and 200.320
Procedures for Managing Equipment – 200.313(d)
Participant support cost classification - 200.456
Record conversion quality control - 200.336

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Questions???

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Disclaimer

This presentation is intended solely to provide general information and does not constitute legal advice or a legal service. This presentation does not create a client-lawyer relationship with The Bruman Group, PLLC and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct. Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at The Bruman Group, PLLC does not create an attorney-client relationship with The Bruman Group, PLLC. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.