RWTMA reauthorized CARE Act programs for fiscal years 2007 through 2009. Part D grants—one of the types of grants under the act—are for entities that provide HIV/AIDS services to women, infants, children, and youth. In fiscal year 2007, HRSA provided $68,500,000 in Part D grants to 90 grantees, ranging from about $230,000 to over $2 million per grant. This represented about 3 percent of all CARE Act funding. CARE Act Part D Grantees Part D grantees compete for grant funding to provide a range of services— both medical and support—to women, infants, children, and youth in a variety of settings. Medical services are those outpatient and ambulatory care services that are part of essential medical care. They can include, for example, primary medical care and HIV/AIDS drug assistance. Support services are nonmedical services necessary to use the medical services. They can include, for example, client transportation to medical appointments, child care, or food assistance services. Applicants generally submit applications to HRSA for 5-year project periods. Grantees receive funding for the first year and then submit annual noncompeting applications to HRSA to receive the remaining funding and to update HRSA on their projects’ spending and services. Although the grant applications and federal funds are released by fiscal year, HRSA refers to grantee spending in each of the 5 years constituting a project period as budget years. Within Part D, there are two types of grants, each of which has a slightly different budget year. For example, in 2007, one Part D budget year ran from August 1, 2007, until July 31, 2008, and another budget year ran from September 1, 2007, until August 31, 2008. Because the Part D grants discussed in this report are from fiscal year 2007 funds and the grant applications and accompanying guidances use the term fiscal year, we use the term throughout this report. Part D grantees include state and local government entities, CBOs—which may or may not be specifically focused on HIV/AIDS—hospitals and medical centers, university/college hospitals and medical centers, and universities/colleges. (See app. I for additional information.) Part D grantees can (1) operate a network of Part D subgrantees that provide services, (2) directly provide the services, or, as most do, (3) both operate a network of subgrantee service providers as well as directly provide services. In addition to spending Part D funds on medical and support services for clients, Part D grantees may also use their Part D grant funds to pay for certain administrative expenses and indirect costs. Indirect costs differ from administrative expenses in that indirect cost rates for specific activities are typically negotiated with the federal agency from which the grantee receives the greatest amount of federal awards and that rate then applies to all relevant federal award programs that permit indirect costs, unless it conflicts with a legislative indirect cost cap. The Office of Management and Budget (OMB) cost principles provide guidance as to the expenses that can be included in indirect costs to the cognizant agencies and grantees according to entity type. Within HHS, the Division of Cost Allocation performs this role. HRSA, following OMB cost principles, defines indirect costs as costs “incurred for common or joint objectives, which cannot be readily identified but are necessary to the operations of the organization.” HRSA defines administrative expenses as “funds that are to be used by grantees for grant management and monitoring activities, including costs related to any staff or activity unrelated to services or indirect costs.” Some expenses can be considered to be either administrative or indirect. For example, rent and utilities could be considered either administrative expenses or indirect costs. However, for a grantee to claim any expenses as indirect costs, it must have an approved indirect cost rate. Smaller organizations or ones that receive only one federal grant may not have approved indirect cost rates, but organizations that receive multiple federal grants would need to have approved rates. For example, a university that receives multiple federal grants would have an indirect cost rate to cover different grants’ shares of costs such as rent, utilities, as well as library expenses. However, a small organization that receives only one federal grant might not have an indirect cost rate since it may be able to account for all of those expenses for the single federal grant it receives. If a grantee does not have an approved indirect cost rate agreement, the grantee must charge (account for) expenses such as rent and utilities as administrative expenses in order to pay for those expenses with grant funds. This means that grantees with approved indirect cost rates have greater latitude than those without such rates to pay for expenses that might otherwise be considered administrative expenses as they can spend more than 10 percent of their Part D grant on expenses such as rent and utilities. The CARE Act now caps at 10 percent the amount of the Part D grant awards that grantees can spend on administrative expenses. HRSA reports that the purpose of this cap is to maximize the amount of federal funds spent on services for Part D clients. HRSA reports that the cap only applies to grantees’ administrative expenses; there is no cap on indirect costs. Prior to RWTMA, there was no cap on administrative expenses for Part D grantees. HRSA project officers are responsible for overseeing the Part D program by reviewing grant applications; writing and revising grant application guidance; responding to grantees’ questions; providing technical assistance and training to grantees; monitoring grantees’ performance and compliance with grant guidance, program expectations, and legislative requirements; and recommending approval on program budget submissions. Project officers are Part D grantees’ primary contact with HRSA, and they are expected to contact their assigned grantees at least once every 3 months. Required audits assist HRSA in providing financial oversight of some Part D grantees’ spending. Organizations that receive Part D grants are generally subject to the requirements of the Single Audit Act, as amended, and the implementing OMB guidance. These provisions require grantees that expend $500,000 or more in federal awards in a year to have either single or program-specific audits for that year conducted by an independent auditor. Single audits are organizationwide audits, not intended to focus specifically on an individual grant awarded by a particular agency. They include a review of the grantee’s financial statements, schedule of federal expenditures, internal controls, and compliance with laws and regulations pertaining to major programs that affect all federal funding, including grants—defined with reference to dollar thresholds—for which the grantee expends federal funds. Generally, grantees that expend federal funds under only one federal program may choose to have a program-specific audit. Among other things, such an audit includes a review of compliance with laws and regulations that affect that program. Grantees reported providing a range of medical and support services to women, infants, children, and youth infected with HIV/AIDS, as well as support services for affected family members. The majority of survey respondents reported that they have not made any changes to the services they provide to their clients in response to the cap, which, according to HRSA, was meant to maximize the amount of federal funds spent on services for Part D clients. However, four grantees reported increasing services and three grantees reported reducing client services. While most grantees reported not making changes to client services, the majority reported that the administrative expense cap, by reducing administrative services, has had a negative effect on their programs. Some grantees, however, reported experiencing positive effects on their programs as a result of the cap. Grantees reported providing a range of medical and support services to women, infants, children, and youth infected with HIV/AIDS, as well as their families (see table 1). Survey respondents reported providing medical services such as outpatient and ambulatory health services, medical case management—including treatment adherence services—mental health services, and HIV counseling and testing. They also reported providing support services such as referrals to health care and supportive services, outreach services, transportation, family advocacy, case management services, and child care. Grantees reported in our survey that they spent an average of 53 percent of their fiscal year 2007 Part D grants on medical services for clients, ranging from 0 percent to 95 percent. They also reported spending an average of about 33 percent of their fiscal year 2007 Part D grants on support services for their clients, ranging from 1 percent to 90 percent. Grant money not spent on medical and support services was used to pay for administrative expenses, indirect costs, and other services not directly related to clients. Grantees reported serving a range of clients with their Part D funds, including affected family members of HIV-infected individuals. Grantees reported serving varying numbers of clients ranging from 75 to over 10,000 clients. Of those clients, grantees reported serving an average of 37 infants less than 24 months of age; an average of 59 children from 2 to 12 years old; an average of 194 youths from 13 to 24 years old; and an average of 443 adults over 25 years of age. The number of clients served varied by type of grantee, with CBOs and universities/colleges serving fewer clients on average (667 and 554, respectively) and government entities, hospital/medical centers, and university/college hospital/medical centers serving more clients on average (1,047, 1,471, and 1,125, respectively). In addition, grantees varied in the types of clients they served. For example, several grantees had no infant or child clients, while one grantee served over 300 infants and another served over 1,100 children. Representatives of Part D grantees, including the AIDS Alliance for Children, Youth & Families, stated that providing both HIV-infected individuals and their uninfected family members with medical and support services makes grantees of the Part D program unique compared to other CARE Act programs.