# Presentation: 593686

## Session #61

- What’s going on with the Federal Fund
- Katrina Turner
- Barbara Johnson

## Agenda

- What is the Federal Fund
- Federal Fund Reporting Requirements
- Uses of Data
- Management Plan
- Impacts to the Federal Fund
- Reconciliation of Annual GAFR Data to Guaranty Agency’s Financial Statements

## What is the Federal Fund

- Federal fund reflects all assets held by the guaranty agency and is the property of the United States
- GA’s are required to maintain fiduciary responsibility

## Federal Fund Reporting   Requirement	

- Annual Report
- Data is reported as of September 30 on an accrual basis and is due by Dec 1

## Uses of Data

- Monitor guarantor’s financial activities;
- Federal & Operating Fund Balances
- Minimum Reserve Ratio
- Projections
- ED’s financial statements;
- Reasonability to NSLDS data;
- Minimum Reserve Ratio; and
- Trigger Rate

## Management Plan

- Guaranty Agencies are required to submit a management plan when the Secretary determines that the administrative or financial condition of the agency is in jeopardy
- Indicators
- Minimum Reserve Ratios
- Declining Federal Fund
- Operational Issues

## Management Plan (Con’t.)

- What is included in a Management Plan
- Business Overview
- Agency description
- Business model
- Challenges

## Management Plan (Con’t.)

- Competitors
- Unique characteristics and factors leading to financial instability

## Management Plan (Con’t.)

- Business Plan
- Specific actions taken or proposed to re-establish financial stability
- Target Dates
- Performance Measures
- Financial projections for Federal Fund and Operating Fund (3 to 5 yrs)

## Management Plan (Con’t.)

- Recommendations for assistance and reporting progress status to the Department
- Audited Financial Statement for the last 2 years

## Management Plan (Con’t.)

- Next Steps
- Submittal
- Review
- Approval
- Monitor
- Exit Strategy

## Impacts to Federal Funds

- Account Maintenance Fee (AMF)
- Authority to Transfer funds was rescinded July 1, 2006

## Impacts to Federal Funds

- Default Aversion Fee (DAF)
- Permitted to Transfer DAF from Federal fund to Operating fund per lender’s request for default aversion on the loan

## Impacts to Federal Funds

- Federal Default Fee
- Requires Collection of 1% for loans guaranteed on/after July 1, 2006
- Requires deposit of fee into GA Federal fund
- GA may collect from borrower or pay from non-Federal sources

## Impacts to Federal Funds

- Reserve Recall
- Final installments of the $250 million Federal reserve recall as required by Section 422(i) of the HEA, (as amended) and held by GA’s were received as of Sept 1, 2007

## Impacts to Federal Funds

- Under/Over reporting of Rehabilitated Loans
- Excess payments in the Federal fund due to incorrect method of calculating the reinsurance complement for rehabilitated loans

## Impacts to Federal Funds

- Incorrect reporting identified during program review or self reported by GA
- GA must request the Department’s approval prior to transferring funds from the Federal fund to the Operating fund

## Impacts to Federal Funds

- How to Request the Funds?
- List of Required Documentation
- Amounts that should have been deposited/reported vs. Amounts that
-   were deposited/reported
- Proof that the funds were actually deposited into the Federal Fund  (Examples may include deposit receipts)
- Reimbursement rate the GA used to calculated the incorrect amount

## Reconciliation of Annual   GAFR Data to Guaranty Agency’s Financial Statements

- Requests for GA Financial Statements
- Annually
- 6 months after audit period ends
- Review/Analysis

## Contact Information

- We appreciate your feedback and comments. We can be reached at:
- 		Katrina Turner		Barbara Johnson
-          202.377.3311		202.377.3327
- 		Email address
- 		Katrina.Turner@ed.gov		BJ.Johnson@ed.gov
- 		Fax: 202.275.0913