# Volume VIII, Section 2 -- Funding Methods

## Current Funding Level (CFL)

The Current Funding Level is one of the mechanisms to assist and ensure
schools are reporting disbursement records on a timely basis. The CFL is
the total amount of funding given to a school at any point of time, and
is a subset of the school ceiling amount (SCA). The CFL includes cash
that has already been drawn down and cash available for the school to
draw down. A separate CFL is maintained for each program by award year.
A school\'s CFL may be adjusted based on its amount of substantiated
cash.

#### Business Rules:

1)  The CFL can be increased by FSA to reflect the needs of a school.

2)  The current CFL for a school, each advance, and percentage of the
    advance that has been substantiated can be viewed on the COD
    website.

3)  If a school determines that the CFL is not at an appropriate level,
    the school can contact their customer service representative and
    request that FSA increase their CFL.

4)  Depending on the school's funding control and delivery method, when
    a school's total accepted actual disbursement records exceed the
    amount of funds already sent to the school, funds are either:

    a.  Transmitted automatically to the school

        OR

    b.  Available for the school to draw down through GAPS

5)  If an advance is not substantiated within the prescribed period of
    time, the school's access to cash may be restricted.

6)  Schools are contacted by a Customer Service Representative as soon
    as it appears that the school is having difficulty substantiating
    advances.

7)  If cash is to be restricted, schools receive electronic warning
    notices and letters from Customer Service and/or FSA.

## Funding Delivery Methods

There are two methods for delivering funds to schools:

-   Advanced Pay

-   Pushed Cash

These two funding delivery methods work in conjunction with the Funding
Controls described below to ensure that schools have access to the funds
they need, when they need them.

### Advanced Pay

Under the Advance Pay delivery method, schools initiate draw down
requests through the Grant Administration and Payment System (GAPS).
Schools may only draw down cash up to the difference between the
school's Current Funding Level (CFL) in COD and the amount of
unsubstantiated cash at the school for a given award year and program.
The U.S. Treasury transmits funds to the school's bank.

### Pushed Cash

Under the Pushed Cash funding delivery method, a school has cash
deposited in its bank account based on actual disbursements that are
submitted and accepted by the COD System. For Direct Loan, an accepted
MPN is required before an actual disbursement is accepted and cash
pushed to the school.

## Funding Controls

Schools' ability to receive cash to fund their Pell Grants and Direct
Loans is contingent upon submitting actual disbursement records to
substantiate drawdowns. A school's funding control dictates the
acceptable timeframe that the school can submit actual disbursement
records and therefore receive cash.

-   There are five Funding Controls:

    -   Advance Pay

    -   Just-In-Time (JIT)

    -   Cash Monitoring 1 (CM1)

    -   Cash Monitoring 2 (CM2)

    -   Reimbursement

### Advance Pay

Under the Advance Pay funding control, schools can submit actual
disbursement records in advance of, on, or after the disbursement date.

#### Business Rules:

1)  The Advance Pay funding control uses the Advance Pay funding
    delivery method.

    a.  Schools can initiate drawdowns through GAPS up to their amount
        of available CFL.

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8)  At the beginning of each award year, a school's initial CFL amount
    is calculated for Pell Grants and Direct Loans on the basis of the
    school's prior years disbursement history.

9)  Each drawdown a school receives using the Advance Pay funding
    control must be substantiated with actual disbursements submitted
    and accepted by the COD System.

    a.  Upon acceptance of an actual disbursement, the CFL calculation
        is performed and uses the actual disbursement to determine if
        the CFL needs to be increased.

10) Actual disbursement records can be submitted within the following
    parameters:

    a.  For the Pell Grant Program, up to 30 calendar days prior to the
        disbursement date.

    b.  For the Direct Loan Program, up to seven (7) calendar days prior
        to the disbursement date.

11) Actual disbursements are applied to substantiate drawdowns on a
    first-in/first-out basis.

12) The CFL may change throughout the year as the school transmits
    actual disbursement information on a "timely basis" and the COD
    System accepts the disbursements.

    a.  A school's CFL can be decreased unless the school submits and
        the COD System accepts sufficient actual disbursements.

13) For Direct Loan, a school eligible for the Advance Pay funding
    control may request to use the Pushed Cash funding delivery method.

### Just-In-Time

Schools using the Pell Just-In-Time funding control are participants in
a pilot program whereby they are extended certain regulatory relief not
provided to other schools.

#### Business Rules:

1)  The Just-In-Time funding control uses the Pushed Cash funding
    delivery method

    a.  Schools have cash deposited in their bank account based on
        actual disbursements that are submitted and accepted by the COD
        System.

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14) Actual disbursements can be submitted up to seven (7) calendar days
    before the disbursement date.

15) The school does not have a CFL until the COD System accepts and
    posts actual disbursements.

16) Cash is deposited in the school's bank account by the disbursement
    date of an accepted and posted actual disbursement.

17) The school must return cash when a downward adjustment to a
    disbursement amount is made.

### Cash Monitoring 1 (CM1)

A school can be placed on Cash Monitoring 1 (CM1) by FSA. Under the CM1
funding control, schools may draw down cash through GAPS based on actual
disbursements submitted to and accepted by the COD System. If a school
is on CM1 at the beginning of the award year, it will not have access to
cash until it has accepted actual disbursements on the COD system.

#### Business Rules:

1)  The Cash Monitoring1 (CM1) funding control uses the Advance Pay
    funding delivery method.

    a.  Upon acceptance of actual disbursements, schools can initiate
        drawdowns through GAPS up to the amount of their available CFL.

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18) The school does not have a CFL until the COD System accepts and
    posts actual disbursements.

    a.  The school's CFL will equal its net accepted actual
        disbursements.

19) Actual disbursements can be submitted up to seven (7) calendar days
    before the disbursement date.

20) Schools placed on CM1 are required to submit documentation of
    disbursements as directed by FSA.

21) For Direct Loan, CM1 schools are required to have a MPN accepted
    before COD will accept actual disbursements.

### Cash Monitoring 2 (CM2)

A school is placed on Cash Monitoring 2 (CM2) by FSA. Under the CM2
funding control, FSA Case Management initiates a drawdown through GAPS
on behalf of a school based on actual disbursements submitted to and
accepted by the COD System.

#### Business Rules:

1)  The Cash Monitoring 2 (CM2) funding control uses the Advance Pay
    funding delivery method.

    a.  FSA Case Management initiates the drawdown through GAPS upon
        review of required documentation.

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22) Actual disbursements can be submitted on or after the disbursement
    date.

23) The school does not have a CFL until the COD System accepts and
    posts actual disbursements.

24) Schools placed on CM2 are required to submit documentation of
    disbursements as directed by FSA.

25) For Direct Loan, CM2 schools are required to have a MPN accepted
    before COD will accept actual disbursements.

### Reimbursement

Under the Reimbursement funding control, FSA Case Management initiates a
drawdown through GAPS on behalf of a school based on actual
disbursements submitted to and accepted by the COD System.

#### Business Rules:

1)  The Reimbursement funding control uses the Advance Pay funding
    delivery method.

    a.  FSA Case Management initiates the drawdown through GAPS upon
        review of required documentation.

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26) Actual disbursements can be submitted on or after the disbursement
    date.

27) For Direct Loan, the school receives an initial CFL amount based on
    their prior years disbursement history. For Pell Grants, the school
    does not have a CFL until the COD System accepts and posts actual
    disbursements.

28) Schools placed on Reimbursement are required to submit documentation
    of disbursements as directed by FSA.

29) For Direct Loan, Reimbursement schools are required to have a MPN
    accepted before COD will accept actual disbursements.

### Relationship between Direct Loan Processing Options and Funding Controls 

+------------------+---------+---------+---------+---------+---------+
|                  | **      | *       | **Cash  | **Cash  | **R     |
|                  | Advance | *Pushed | Mon     | Mon     | eimburs |
|                  | Pay**   | Cash**  | itoring | itoring | ement** |
|                  |         |         | 1       | 2       |         |
|                  |         |         | (CM1)** | (CM2)** |         |
+------------------+---------+---------+---------+---------+---------+
|                  | **R     | **R     | **R     | **R     | **R     |
|                  | eceives | eceives | eceives | eceives | eceives |
|                  | an      | no CFL  | no CFL  | no CFL  | an      |
|                  | Initial | prior   | prior   | prior   | Initial |
|                  | CFL \>  | to      | to      | to      | CFL \>  |
|                  | 0       | sub     | sub     | sub     | 0       |
|                  | before  | mission | mission | mission | before  |
|                  | sub     | of      | of      | of      | sub     |
|                  | mission | actual  | actual  | actual  | mission |
|                  | of any  | d       | d       | d       | of any  |
|                  | actual  | isburse | isburse | isburse | actual  |
|                  | d       | ments** | ments** | ments** | d       |
|                  | isburse |         |         |         | isburse |
|                  | ments** |         |         |         | ments** |
+------------------+---------+---------+---------+---------+---------+
|                  | *       | *       | *       | **Case  | **Case  |
|                  | *School | *Direct | *School | Man     | Man     |
|                  | in      | cash    | in      | agement | agement |
|                  | itiates | payment | itiates | in      | in      |
|                  | d       | de      | d       | itiates | itiates |
|                  | rawdown | posited | rawdown | d       | d       |
|                  | through | in      | through | rawdown | rawdown |
|                  | GAPS    | s       | GAPS    | through | through |
|                  | we      | chool's | we      | GAPS    | GAPS    |
|                  | bsite** | bank    | bsite** | upon    | upon    |
|                  |         | account |         | review  | review  |
|                  |         | based   |         | of      | of      |
|                  |         | on      |         | r       | r       |
|                  |         | a       |         | equired | equired |
|                  |         | ccepted |         | d       | d       |
|                  |         | actual  |         | ocument | ocument |
|                  |         | d       |         | ation** | ation** |
|                  |         | isburse |         |         |         |
|                  |         | ments** |         |         |         |
+------------------+---------+---------+---------+---------+---------+
|                  | *       | *       | *       | *       | *       |
|                  | *Actual | *Actual | *Actual | *Actual | *Actual |
|                  | disbur  | disbur  | disbur  | disbur  | disbur  |
|                  | sements | sements | sements | sements | sements |
|                  | can be  | cannot  | cannot  | cannot  | cannot  |
|                  | a       | be      | be      | be      | be      |
|                  | ccepted | a       | a       | a       | a       |
|                  | with or | ccepted | ccepted | ccepted | ccepted |
|                  | without | without | without | without | without |
|                  | a       | a       | a       | a       | a       |
|                  | ccepted | ccepted | ccepted | ccepted | ccepted |
|                  | pro     | pro     | pro     | pro     | pro     |
|                  | missory | missory | missory | missory | missory |
|                  | notes** | notes** | notes** | notes** | notes** |
+------------------+---------+---------+---------+---------+---------+
| **DL - Option    |         | X       | X\*     |         |         |
| 1**              |         |         |         |         |         |
|                  |         |         |         |         |         |
| -   Submits      |         |         |         |         |         |
|     actual       |         |         |         |         |         |
|                  |         |         |         |         |         |
|    disbursements |         |         |         |         |         |
|     up to 7      |         |         |         |         |         |
|     calendar     |         |         |         |         |         |
|     days in      |         |         |         |         |         |
|     advance      |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| **DL --Option    | X       | X\*\*   | X       |         |         |
| 2**              |         |         |         |         |         |
|                  |         |         |         |         |         |
| -   Submits      |         |         |         |         |         |
|     actual       |         |         |         |         |         |
|                  |         |         |         |         |         |
|    disbursements |         |         |         |         |         |
|     up to 7      |         |         |         |         |         |
|     calendar     |         |         |         |         |         |
|     days in      |         |         |         |         |         |
|     advance      |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| **DL -- Standard |         | X       | X\*\*\* |         |         |
| Origination**    |         |         |         |         |         |
|                  |         |         |         |         |         |
| -   Submits      |         |         |         |         |         |
|     actual       |         |         |         |         |         |
|                  |         |         |         |         |         |
|    disbursements |         |         |         |         |         |
|     up to 7      |         |         |         |         |         |
|     calendar     |         |         |         |         |         |
|     days in      |         |         |         |         |         |
|     advance      |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+
| **DL --          |         |         | X       | X       | X       |
| Reimbursement**  |         |         |         |         |         |
|                  |         |         |         |         |         |
| -   Submits      |         |         |         |         |         |
|     actual       |         |         |         |         |         |
|                  |         |         |         |         |         |
|    disbursements |         |         |         |         |         |
|     on or after  |         |         |         |         |         |
|     disbursement |         |         |         |         |         |
|     date         |         |         |         |         |         |
+------------------+---------+---------+---------+---------+---------+

^\*^ If an Option 1 school is placed on CM1, their funding delivery
method will remain Pushed Cash unless FSA manually changes it.

^\*\*^ An Option 2 school can contact COD Customer Service to request to
use the Pushed Cash delivery method. FSA will review the request and, if
appropriate, make the change.

^\*\*\*^ If a Standard Origination school is placed on CM1, their
funding delivery method will remain Pushed Cash unless FSA manually
changes it.

### Relationship between Pell Processing Options and Funding Controls

+---------------+----------+----------+----------+----------+----------+
|               | *        | **Pushed | **Cash   | **Cash   | *        |
|               | *Advance | Cash**   | Mo       | Mo       | *Reimbur |
|               | Pay**    |          | nitoring | nitoring | sement** |
|               |          |          | 1        | 2        |          |
|               |          |          | (CM1)**  | (CM2)**  |          |
+---------------+----------+----------+----------+----------+----------+
|               | **May    | **       | **       | **       | **       |
|               | receive  | Receives | Receives | Receives | Receives |
|               | an       | no CFL   | no CFL   | no CFL   | no CFL   |
|               | Initial  | prior to | prior to | prior to | prior to |
|               | CFL \> 0 | su       | su       | su       | su       |
|               | before   | bmission | bmission | bmission | bmission |
|               | su       | of       | of       | of       | of       |
|               | bmission | actual   | actual   | actual   | actual   |
|               | of any   | disburs  | disburs  | disburs  | disburs  |
|               | actual   | ements** | ements** | ements** | ements** |
|               | disburs  |          |          |          |          |
|               | ements** |          |          |          |          |
+---------------+----------+----------+----------+----------+----------+
|               | **School | **Direct | **School | **Case   | **Case   |
|               | i        | cash     | i        | Ma       | Ma       |
|               | nitiates | payment  | nitiates | nagement | nagement |
|               | drawdown | d        | drawdown | i        | i        |
|               | through  | eposited | through  | nitiates | nitiates |
|               | GAPS     | in       | GAPS     | drawdown | drawdown |
|               | w        | school's | w        | through  | through  |
|               | ebsite** | bank     | ebsite** | GAPS     | GAPS     |
|               |          | account  |          | upon     | upon     |
|               |          | based on |          | review   | review   |
|               |          | accepted |          | of       | of       |
|               |          | and      |          | required | required |
|               |          | posted   |          | documen  | documen  |
|               |          | actual   |          | tation** | tation** |
|               |          | disburs  |          |          |          |
|               |          | ements** |          |          |          |
+---------------+----------+----------+----------+----------+----------+
| **Pell        | X        | X\*      |          | X\*\*    | X\*\*    |
| Standard      |          |          |          |          |          |
| (Account      |          |          |          |          |          |
| type=Obligate |          |          |          |          |          |
| only)**       |          |          |          |          |          |
|               |          |          |          |          |          |
| -   Submits   |          |          |          |          |          |
|     actual    |          |          |          |          |          |
|               |          |          |          |          |          |
| disbursements |          |          |          |          |          |
|     up to 30  |          |          |          |          |          |
|     calendar  |          |          |          |          |          |
|     days in   |          |          |          |          |          |
|     advance   |          |          |          |          |          |
+---------------+----------+----------+----------+----------+----------+
| **Pell        |          | X        | X        | X\*\*    | X\*\*    |
| Just-In-Time  |          |          |          |          |          |
| (Account      |          |          |          |          |          |
| type=Ob       |          |          |          |          |          |
| ligate/Pay)** |          |          |          |          |          |
|               |          |          |          |          |          |
| -   Submits   |          |          |          |          |          |
|     actual    |          |          |          |          |          |
|               |          |          |          |          |          |
| disbursements |          |          |          |          |          |
|     up to 7   |          |          |          |          |          |
|     calendar  |          |          |          |          |          |
|     days in   |          |          |          |          |          |
|     advance   |          |          |          |          |          |
+---------------+----------+----------+----------+----------+----------+

^\*^ At this time, a Pell Grant school on the Advanced Pay funding
control cannot choose to use the Pushed Cash funding delivery method.

^\*\*^ If any school is placed on either CM2 or Reimbursement, they can
no longer submit disbursement records in advance of the disbursement
date.