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State Accounting and Budgetary Procedures 

Title 19 | Chapter 4 | Subchapter 19

SUBCHAPTER 19 - FEDERAL GRANTS AND AIDS

19-4-1901. Submission of requests.

(a) Requests for federal funds for grants, aids, reimbursement, and direct or indirect cost reimbursement plans, other than research grants, originated by a state agency other than a state institution of higher education shall be submitted to the Department of Finance and Administration prior to their submission to the granting source. (b) Excepting the provisions of § 19-4-1907, the remainder of this subchapter shall not be applicable to State institutions of higher education.

History. Acts 1973, No. 876, § 21; A.S.A. 1947, § 13-347; Acts 1989, No. 37, § 2.

19-4-1902. Preliminary or informal proposals.

Preliminary or informal proposals which do not commit personnel, space, facilities, or state funds may be submitted directly to the granting source. However, when the grant requested, if approved, would result in the commitment of state personnel, space, facilities, equipment, or funds, or the program to be proposed by the state agency with the resources from the federal grant has not received specific legislative authorization through an appropriation or specific enabling legislation, the requesting agency shall notify, in writing, the Director of the Department of Finance and Administration that such preliminary or informal proposal is being made and shall briefly describe it.

History. Acts 1973, No. 876, § 21; A.S.A. 1947, § 13-347.

19-4-1903. Evaluation report.

Each request submitted to the Department of Finance and Administration shall be accompanied with an evaluation report prepared by the state agency that includes information as follows, but not necessarily limited thereto: (1) A description of the purpose of the program;

(2) An explanation of the relationship of the program or plan to the agency's total program and why the program is needed;

(3) Its priority in the total program;

(4) A statement whether similar programs are being conducted, if known, or could be conducted in or by other agencies;

(5) An explanation of the effects of this program and the state’s obligation, if any, to continue the program, and the level of continuance, in the event federal funds are curtailed;

(6) A statement of how the agency's programs and objectives would be affected if the request is not approved; and

(7) The amount of overhead payment anticipated from federal funds, and its adequacy, to reimburse the agency and central state services for actual indirect costs reimbursements.

History. Acts 1973, No. 876, § 21; A.S.A. 1947, § 13-347.

19-4-1904. Receipt of funds.

(a) When any federal funds, grants, aids, or reimbursements, including unsolicited funds, are received by a state agency, the Department of Finance and Administration shall be notified on forms to be prescribed by the director of the department. (b) The department shall prescribe procedures for quarterly reporting information relative to grants, aids, reimbursement, and direct or indirect cost reimbursement plans, and research grants and aids for the institutions of higher education.

History. Acts 1973, No., 876, § 21; A.S.A. 1947, § 13-347; Acts 1989, No. 37, § 3.

State forms necessary to fulfill the requirements of 19-4-1901 through 19-4-1904 can be found at:

http://www.whitehouse.gov/omb/grants/sf424.pdf
http://www.dfa.arkansas.gov/offices/intergovernmentalServices/Pages/stateClearinghouse.aspx

R1-19-4-1904 Federal Grants and Aid

R1-19-4-1904 Federal Grants and Aid

General Policies and Procedures

From time to time state agencies may request or receive federal funds in the form of grants or other aid. By nature, federal grants are subject to a full range of varying, yet specific, post award administrative requirements. To reasonably assure compliance with state and federal law as well as accurately report financial information, state agencies should maintain effective internal control over the financial administration of federal programs consistent with the following requirements:

U.S. Office of Management and Budget (OMB) Circulars A-87 Cost Principles for State, Local, and Indian Tribal Governments, A-102 Grants and Cooperative Agreements With State and Local Governments, A-133 Audits of States, Local Governments, and Non-Profit Organizations, the recommendations and requirements contained in the A-133 Compliance Supplement (current edition), the Cash Management Improvement Act of 1990, the regulations promulgated pursuant thereto at 31 CFR Part 205, and other relevant grants management provisions applicable to the federal program in question, as announced in the Catalog of Federal Domestic Assistance and in The Federal Register.

These essential documents can be found within the following five (5) links:

http://www.whitehouse.gov/omb/grants/grants_circulars.html
http://www.fms.treas.gov/cmia/statute.html 
http://www.fms.treas.gov/fedreg/31cfr205final.pdf 
http://12.46.245.173/cfda/cfda.html 
http://www.gpoaccess.gov/fr/index.html
Grant or Aid Pre-application

Grant or Aid Pre-application

All preliminary, pre-application or informal proposals which may result in the commitment of personnel, space, facilities, equipment or state funds shall be submitted to the Department of Finance and Administration-Intergovernmental Services (DFA-IGS) with an Evaluation Report at the time it is submitted to the federal granting agency. DFA-IGS shall coordinate the review of any proposed program to prevent overlap, inefficiency or violation of legislative intent. (ACA § 19-4-1902, ACA § 19-4-1903)

State institutions of higher education should submit preliminary proposals to DFA-IGS at http://www.dfa.arkansas.gov/offices/intergovernmentalServices/Pages/default.aspx as informational only. (ACA § 19-7-604(b)(3))

Grant or Aid Application

All formal proposals or other applications for federal funds in the form of grants, aids and reimbursements, except research grants or requests originating from a state institution of higher education, are to be submitted to DFA-IGS and the Governor’s Office prior to submission to the granting source. The submission should include a summary of the application with the indirect cost rate of the applicant agency and a projection of the amount to be received as indirect cost reimbursement, if applicable. DFA-IGS is to file a summary of this submission with the Bureau of Legislative Research of the Legislative Council quarterly for review. (ACA § 19-4-1901, ACA § 19-7-604)

MFG Requirements for New or Additional Federal Funds

When new federal programs or new Workforce Investment Act programs become available which require the benefiting state agency to employ additional personnel or require the benefiting state agency to obtain additional appropriations so that the program meets the requirements of or performs the objectives of the program, the head of the affected agency may request additional appropriations from the Governor and the Chief Fiscal Officer of the State. The agency’s request must be on a ―Miscellaneous Federal Grant‖ Form (MFG) and include supporting documentation, if applicable. The completed MFG and supporting documentation should be submitted to the agency’s Budget Analyst at the Department of Finance and Administration-Office of Budget. After consulting the Legislative Council or the Joint Budget Committee, the Governor may approve or modify the requests. (ACA § 19-7-502)

The Miscellaneous Federal Grant Form can be found on the DFA – Office of Budget website at: http://www.dfa.arkansas.gov/offices/budget/Pages/forms.aspx

Quarterly Reporting Requirements

Information on all grants, aids, reimbursements and reimbursement plans, including research grants and those originating from a state institution of higher education, is to be reported to DFA-IGS quarterly. These reports shall be filed with respect to new federal programs or expansions of existing federal programs which were not in existence or which were not implemented by state participation at the time of the adjournment of the regular session of the General Assembly and entered into prior to the convening of the next regular session of the General Assembly. The DFA Director is to report to the Legislative Council on federal funds quarterly. The report is to summarize and itemize all programs which involve the expenditure of federal funds and is to include the following:

a brief purpose of the agreement,

the amount of federal funds to be expended,

the amount of state matching funds, if required,

the name of the administering agency or department, as well as any additional information that would assist the Legislative Council in determining the nature and purpose of the agreement.

Findings and recommendations by the Legislative Council from review of the quarterly reports are to be reported to each subsequent regular session. (ACA § 19-4-1904; ACA § 19-7-101, ACA § 19-4-1907, ACA § 19-4-1908)

Funds Receipt

The DFA-IGS is to be notified when a state agency receives notification or obtains any federal funds, grants, aids or reimbursements, including unsolicited federal funds. Such notification shall include reporting federal funds received for indirect cost reimbursements resulting from overhead cost of the entity or overhead cost allocated to the entity through the Consolidated Statewide Cost Allocation Plan. A summary of the notifications will be provided by DFA-IGS to the Bureau of Legislative Research of the Legislative Council for review quarterly. (ACA § 19-7-604, ACA § 19-4-1904)

All such funds are to be deposited as all other State Treasury funds. Any federal funds received on behalf of public school districts shall be forwarded to the county treasurer or district treasurer as the district chooses. Federal funds received by the agencies set out in ACA § 19-5-205(b) shall be deposited in to the State Central Services Fund. (ACA §19-3-501, ACA § 19-3-518, ACA § 19-4-408, ACA § 19-5-205)

CMIA and other Interest Earned on Federal Funds

Interest earned on federal funds received under the State and Local Fiscal Assistance Act of 1972 is to be transferred from the Securities Reserve Fund at the direction of the Chief Fiscal Officer of the State based upon the related portion of the average daily balance of the federal funds on a quarterly basis. (ACA § 19-3-521)

PLEASE NOTE: Refer to R1-19-4-1807.

Funds Disbursement

Disbursement made on specific funds receiving federal funding require the State Auditor to process warrants and the Treasurer of State to redeem the warrants presented for payment in accordance with the Federal Cash Management Improvement Act of 1990, Pub. L. 101-453, Oct. 24, 1990, 104 Stat. 1058, after the Chief Fiscal Officer of the State notifies them that the state agency director has certified that the Federal fund transfer request has been completed and accepted by the federal funding source and that the federal funds will be transferred for the benefit of the state fund to pay the warrants. (ACA § 19-4-1107)

In the event of actions that would adversely affect funds received or related estimates, each agency head administering federal funds is required to immediately notify the State’s Chief Fiscal Officer. (ACA § 19-4-1306)

Recommendations of Governor

ACA § 19-7-504 states that the Governor will submit recommendations to the General Assembly at the beginning of each regular session of the Arkansas General Assembly for any federal programs during the following fiscal biennium. Such recommendation is to include a recommended appropriation of federal and state funds necessary for each program. In the event the General Assembly fails to appropriate the funds for any program, the State will no longer participate in such program effective June 30th following adjournment of the regular session.

Accounting

The Federal Grants & Reimbursements, general ledger account 4050004000, is the only account used to record federal grant revenue received directly from the federal grantor or sub grantor that is not another State of Arkansas agency. Grants and Aid from Other State Agencies, general ledger account 6060001000, is used to record grants received from other state agencies. The state agency disbursing grant funds to another agency should use Grants and Aid to Other State Agencies, general ledger account 6061001000. Each agency will be required to provide the Department of Finance and Administration-Office of Accounting-CAFR Section a list of all federal funds with CFDA numbers, the general ledger account the revenue was recorded to and the related amount. For additional information on recording and tracking Federal Grants and Aid see P1-19-5-101 and Project Accounting at http://www.dfa.arkansas.gov/offices/informationServices/aasis/Training/Pages/default.aspxPLEASE NOTE: Also refer to ACA § 19-4-2201 et seq. to review requirements for discretionary grants. Also refer to ACA § 19-7-101 et seq. for more information on Federal Funds.

19-4-1905. Research grants.

The Department of Finance and Administration shall prescribe procedures for reporting information relative to federal research grants and aids for the colleges and universities.

History. Acts 1973, No. 876, § 21; A.S.A. 1947, § 13-347.

19-4-1906. Letters of credit.

(a) As used in this subchapter, unless the context otherwise requires: (1) "Checks-paid letter of credit" means a system which requires state warrants to be issued without federal moneys on deposit in the State Treasury. The federal share of the warrants would only become available to the Treasurer of State on the day the warrants are presented for redemption. A receipt would be processed and credited to the proper fund before the warrants are redeemed;

(2) "Delay-of-drawdown letter of credit" means a system which requires the Auditor of State to issue warrants without federal moneys on deposit in the State Treasury for specific programs primarily financed by federal moneys. Moneys are drawn upon the letter of credit and deposited with the Treasurer of State based on an agreement with the federal government establishing warrant redemption patterns. Deposits are made each day based on estimates of the amount of warrants to be redeemed each day. In the event that warrants are presented for redemption on a given day in excess of the amount deposited in the State Treasury, an additional amount of moneys may be requested on a letter of credit and deposited with the Treasurer of State to enable proper warrant redemption and to prevent deficit spending; and

(3) "Federal letter of credit" means an instrument certified by an authorized official of a grantor agency which authorizes a grantee to draw funds needed for immediate disbursement in accordance with the provisions of Treasury Circular number 1075.

(b)(1) Upon approval of the Chief Fiscal Officer of the State and under procedures prescribed by the Chief Fiscal Officer of the State, Letters of credit, either individually or under a single, unified, checks-paid, or delay-of-drawdown system may be included and accounted for on the books of record of the Auditor of State, Chief Fiscal Officer of the State, and applicable state agency as deferred federal revenues to be treated as an asset comparable to "cash on hand." In connection therewith, the Chief Fiscal Officer of the State may direct the creation and establishment of a revolving paying account on the books of records of the applicable state’s accounting records. Furthermore, upon implementation of a checks-paid or delay-of-drawdown system, the affected agency may issue vouchers, the Department of Finance and Administration may approve vouchers for payment, and the Auditor of State may issue warrants for federal programs without regard to federal fund or paying account balances on deposit in the State Treasury.

(2)(A) In no event shall the Treasurer of State redeem any warrants without sufficient fund balances on deposit equal to the total amount of warrants presented for redemption.

(B) In no event shall the implementation of a checks-paid or delay-of-drawdown letter of credit system be construed as deficit spending.

(C) The Chief Fiscal Officer of the State, after consulting with the Auditor of State and Treasurer of State, may prescribe such rules and regulations as necessary to implement a checks-paid or delay-of-drawdown letter of credit system.

(3) No agency shall implement a checks-paid or delay-of-drawdown letter of credit system except upon approval of the Chief Fiscal Officer of the State and upon advice of the Legislative Council.

History. Acts 1973, No. 876, § 21; 1981, No. 572, § 1; A.S.A. 1947, § 13-347.

19-4-1907. Quarterly reports.

(a) The Director of the Department of Finance and Administration shall file quarterly reports with the Legislative Council itemizing and summarizing all contracts or agreements entered into by the Governor of the State of Arkansas with the federal government, or any agencies or instrumentalities thereof, whereby the State of Arkansas is to participate in any program involving the expenditure of federal funds. These reports shall be filed, whether or not state funds are obligated in connection therewith, with respect to new federal programs or expansions of existing federal programs which were not in existence or which were not implemented by state participation, at the time of the adjournment of the regular session of the General Assembly and entered into prior to the convening of the next regular session of the General Assembly. (b) The report shall list, with respect to each such contract or agreement:

(1) A brief statement of the purposes of the agreement;

(2) The amount of federal funds to be expended thereunder;

(3) The amount of any state matching funds required in connection with such program, if any;

(4) The name of the agency that will administer the program; and

(5) Such additional information as will enable the members of the Legislative Council to determine the nature and purposes of the agreement.

History. Acts 1973, No. 876, § 21; A.S.A. 1947, § 13-347.

19-4-1908. Review and continuance of programs.

(a) The Legislative Council shall review the quarterly reports filed by the Director of the Department of Finance and Administration as required in this subchapter. The Legislative Council shall submit such findings and recommendations to each succeeding regular session of the General Assembly for enabling legislation to implement, restrict, or prohibit the state’s participation in any such new federal program or expanded federal program which was implemented by contract or agreement entered into by the Governor subsequent to the adjournment of the preceding session of the General Assembly. (b) In the event the next regular session of the General Assembly shall fail to prohibit or restrict the state’s participation in any new or expanded program implemented by contract or agreement signed by the Governor with the federal government during the interim since the immediately preceding regular session of the General Assembly, then the state may continue to participate in the federal program. On the other hand, if the General Assembly shall restrict or prohibit the state’s participation in any new or expanded federal program implemented by contract or agreement subsequent to the last regular session, then it shall be unlawful for the state to continue to participate in or to expend any state funds in connection with any such program. All contracts or agreements entered into by the Governor or any agency of the state acting under authority of the Governor shall be void and the state’s participation therein shall cease upon the adjournment of the General Assembly, or at such later date if a later date for the termination of the state’s participation therein has been prescribed by law.

History. Acts 1973, No. 876, § 21; A.S.A. 1947, § 13-347.