U. S. DEPARTMENT OF EDUCATION

OFFICE OF SPECIAL EDUCATION & REHABILITATIVE SERVICES

REHABILITATION SERVICES ADMINISTRATION

WASHINGTON, D. C. 20202-2552

INFORMATION MEMORANDUM

RSA-IM-93-21

RSM-1050^1^

DATE: July 12, 1993

TO : STATE VOCATIONAL REHABILITATION AGENCIES (GENERAL)

STATE VOCATIONAL REHABILITATION AGENCIES (BLIND)

CLIENT ASSISTANCE PROGRAMS

REGIONAL REHABILITATION CONTINUING EDUCATION

PROGRAMS (RCEPS)

RSA SENIOR MANAGEMENT TEAM

SUBJECT : Impact of Automated Suspension of Funds and M-Account
Legislation on RSA\'s

> Formula Grant Pro­grams

CONTENT : This information memorandum alerts RSA\'s formula grantees to
the implications of recent restrictions on the availability of grant
funds. These restric­tions include the M-Account legislative require­ments
and the Department\'s automated suspension of funds process.

Information concerning these restrictions has already been communicated
to the grantee fiscal offices by the Department of Education\'s
financial office. RSA grantees should work closely with their respec­tive
budget offices to assure that claims for grant funds are made in a
timely manner and during the period of availability.

[M-ACCOUNT LEGISLATION]{.underline}

Public Law 101-510 (National Defense Authorization Act of FY 1991),
enacted by Congress on November 5, 1990, included provisions affecting
the availabil­ity of funds Government-wide. Specifically, except for
\"x-year funds\" (funds not appropriated for a specified year), the law
restricts the period for obligation, tracking, and reporting of Federal
funds to five years after the Federal period of avail­abil­ity for
obligation ends.

^1^Under Development

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This law has limited the time period for making adjust­ments to prior
year funds. RSA grantees and the De­part­ment will have five years, after
the Federal period of availabil­ity for obligation ends, for making
adjust­ments, tracking, and

re­porting of Feder­al funds.

This means that FY 1988 grant funds, available for obligation by RSA
from

October 1, 1987 through September 30, 1988, will only be available to

grantees from Finance until September 30, 1993. The period of
availability for

any subsequent fiscal year\'s funds is calculated from the Septem­ber 30
date of

each respective fiscal year.

On the September 30 cutoff date, all obligated and unobligated balances
will be canceled and the grantee\'s current balance of available funds
will reflect the decrease in the Department of Educa­tion Payment
Management System (EDPMS). After that date no additional drawdowns may
be made for those respective fiscal years. Therefore, the grantee must
make sure that all funds are dis­b­ursed before the five-year cutoff date
for each fiscal year. Beyond that date, the gran­tee will not be able to
recover those funds.

[AUTOMATED SUSPENSION OF FUNDS]{.underline}

In an action separate from the enactment by Con­gress of P.L. 101-510,
the Department\'s Accounting and Financial Management Service (AFMS)
began in December 1990 to \"automatically suspend\" (deoblig­ate)
unliquidated balances on grant awards main­tained in the Education
Department\'s Payment Man­agement System (EDPMS). The Automated
Suspension of Funds process is scheduled quarterly. This process
identifies any grants in EDPMS which have been expired for 18 months.
AFMS notifies RSA grantees on the ED/PMS 272-G (Inactive Documents
Reports) and notifies the Department\'s program offices which grants
have unexpended balances that are scheduled for deobligation by the end
of the quarter. Program offices will have approximately three months to
make adjustments before these funds are deobligated in the Departmen­t\'s
financial systems.

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[REQUESTING RESTORATION OF FUNDS]{.underline}

It is important to note that the Department main­tains funds by common
accounting numbers (CANS). For example, funds appropriated for the
Section 110 formula grant program are in an account iden­tified by CAN
E002425. After the close of the fiscal year, unobligated balances
reported on the year-end or final Financial Status Reports, or funds
deobli­gated 21 months after the expiration date of the grant, are stored
in that account in CAN E002425.

Funds requested for restoration to an expired ac­count are considered on
a first-

come basis. Formula grantees requiring adjust­ments to ex­pired accounts
must

submit a written justifi­ca­tion to the originating office: Commis­sioner,

Reha­bilitation Services Administra­tion, 330 C Street, S. W., Room 3030
MES

Bldg., Washing­ton, D.C. 20202-2552, Attention: Slagle Allbritt­on,

Director, Financial Management and Informa­tion Systems Staff.

Each request for adjustment will be judged on its own merit. The
fol­lowing Criteria for Adjustment is taken from the General Account­ing
Office publi­cation, Princi­ples of Federal Appropriation Law, 2nd ed.,
(Dec. 1992). Adjustment is permitted to:

\(1\) adjust formally recorded obligations where the amount originally
recorded proves to be less than the actual amount obligated;

\(2\) liquidate valid obligations which arose but were not formally
recorded prior to the appropria­tion\'s expiration provided that the
obligations meet one of the criteria for formal recordation summarized
below:

\(a\) a binding agreement between an agency and another person;

\(b\) a loan agreement;

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\(c\) an order required by law to be placed with an agency;

\(d\) a grant or subsidy payable;

\(e\) a liability that may result from pending liti­gation;

\(f\) employment or services of persons, or expense of travel under law;
or

\(g\) services provided by public utility.

[STEPS TO AVOID ERRONEOUS DEOBLIGATION OF FUND]{.underline} [BALANCES
AND TO MINIMIZE THE NEED FOR RESTORATION OF FUNDS]{.underline}

To minimize common errors, listed below are some standard fiscal
requirements that should be noted and their importance emphasized:

(1) Accurate and timely submission of Federal Cash Transaction Report
    (ED-

> 272\)

\(a\) Review the accuracy of the data that is sup­plied by FMS on the
ED-272

report. Make any chang­es or corrections to the report and send the
report to the Department\'s Accounting and Financial Man­agement Service.

\(b\) Report all expenditures incurred for that reporting period on the
ED-272 report and submit it to the Department\'s Accounting and
Financial Man­agement Service.

\(2\) Accurate and timely submittal of Financial Status Reports (SF-269)

(a) Report all Federal funds re­ceived under a grant, includ­ing funds
    received during the reallot­ment process or trans­fer of funds between
    agencies. If a request to transfer funds between agen­cies occurs
    after the close of the fiscal year, a re­vised SF-269 is required by
    each agency. Line 10o (Total Feder­al Funds Autho­rized) on the SF-269
    should equal block 6 on the last grant award re­ceived for that
    fiscal year.

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(b) RSA formula grants are considered funds awarded to the State. In
    States that have two agencies, there should be communication be­tween
    agencies to verify that all funds award­ed can be utilized by at
    least one of the agen­cies. A request to transfer funds will not be
    honored if one agency has submitted a final SF-269 for a fiscal year
    for a particu­lar program.

\(c\) Check the report for mathematical errors. The Federal Share of
Cash Outlays plus the Federal Share of Unliquidated Obligations reported
on the SF-269 should equal the ED-272 report. NOTE: An unobligated
balance re­ported on the final SF-269 report will reduce your grant
authority.

(3) Submittal of final Financial Status Reports (SF-269). Gran­tees are
    re­qui­red to liq­ui­date all obli­gations incurred under the grant
    within 90 days after the grant peri­od, which is the date shown in
    block five on the grant document. Unless the grantee has re­quested
    and received an approved extension under Education Department
    General Adminis­tra­tive Regu­lations (ED­GAR)80.23(b), Liqui­dation of
    Obliga­tions. Grantees should request waiver to the 90-day extension
    before the close of the current fiscal year. (For refer­ence see
    IM-91-24, dated July 2, 1991).

INQUIRIES TO: If there are any questions about this matter, contact the
Director, Financial Management and Information Systems Staff at (202)
205-8358.

William L. Smith Acting Commissioner