The Education Department General Administrative Regulations (EDGAR) Part 75 Amendments (Expanded Authorities)

The new authorities conferred on grantees in the new amendments to Part 75, represent a significant change in the Department's business practices with regard to grants administration. The four different administrative actions discussed in the Part 75 amendments represent the most common types of administrative actions that grantees undertake on federally-funded projects and are the ones that have traditionally accounted for the largest percentage of paperwork associated with obtaining prior approval from the Department.

Role of Expanded Authorities in the Process of Partnership

More important than this shift in administrative procedure is the change in philosophical stance that underlies the expanded authorities regulations. The purpose is to create a climate in which the Department staff and project directors can work together and communicate better so as to foster better performance in projects. The desired outcome of this renewed emphasis on Department/grantee collaboration and improved performance is a higher level of accountability that will lead to achieving the legislated mission of the Department's discretionary grant programs.

The administrative categories covered by the expanded authorities are:

TIME EXTENSIONS

The revised regulations allow grantees to extend the end date of the project period for a grant one time for a period up to 12 months without the need to receive prior approval from the Department, except where such an extension would:

-- require additional federal funds;
-- change the scope or objectives of the project;
-- be merely for the purpose of exhausting unexpended funds; or
-- be contrary to federal statute, regulation, or grant conditions.

However, a grantee is required to give the Department a notification of a planned extension at least 10 days before the end of the project period, with supporting reasons for the extension. The ten-day notification requirement is not designed to have the Department give approval. Rather, it is for the purpose of giving the Department sufficient time to revise the data element for the project period end date in the Department's Grant Administration and Payment System. This procedure is necessary to keep Financial Payments Group from closing the grant prematurely under its automated procedures.

Budget Transfers

Under the new expanded authorities grantees have significantly greater latitude than they had before to make budget transfers within grant projects without prior departmental approval. In general, grantees no longer need to seek departmental approval for budget transfers. The only exceptions are: change in the scope of project activities, specific requirements of certain programs and cases where the Department has imposed a 10% limitation on budget transfers for "high risk" grantees.

Carryover

In the past, the Department's practice was to require grantees to get permission from the Department to use some or all of funds remaining from an expired budget period for expenditures in the following one.

The regulatory amendments now provide that grant funds are carried over automatically from one budget period to the next, without the need for approval from the Department or any action on the part of the grantee. The grantee may spend unexpended funds in the following budget period for any allowable cost that falls within the scope and objectives of the project, not just for expenditures arising out of uncompleted activities.

However, in those cases where the Department has placed no prior restrictions on a grantee's use of carry-over funds as a condition of award but has developed reservations in the course of project monitoring about a grantee's use of such funds, the new regulations permit the Department to require a written statement from the grantee describing the ways it intends to use the remaining funds. In cases where the Department does not concur with the grantee's planned expenditures, it no longer denies the grantee use of some or all of the remaining funds, but, rather reduces new grant funds awarded for the following budget period.

While the practical effect of the new provisions is essentially the same as existed previously, the new provisions shift the responsibility to the Department to act affirmatively to limit expenditures of remaining funds (by reducing new funding made available). The amount of new funds awarded for the subsequent budget period will effectively reveal the Department's stance on a particular grantee's use of unexpended funds.

Preaward Costs

The Part 75 amendments establish another new section, 75.263, which permits all grantees to spend funds before an award period. This permits grantees to incur expenditures for allowable items and activities of a project up to 90 days before the beginning of a grant, without the prior approval of the Department.

Attachment Z

Under certain circumstances, if it becomes inappropriate for a grantee to exercise one or more of the expanded authorities, the Department may use attachment Z to disallow one or more of the expanded authorities. This could be a situation where the Department has designated a grantee as 'high-risk,' or is making an award to a grantee that has historically exhibited great difficulty complying with statutory, regulatory, or administrative requirements. Some of the considerations that the Department might take into account in making such a determination would include, but are not limited to, instances where a grantee:

-- Has frequent turnover in key personnel and/or the person(s) managing grant projects is (are) not familiar with federal statutes or ED regulations;

-- Does not have a strong financial management system or a sound knowledge of cost principles and consistently proposes using grant funds for unallowable costs and activities;

-- Proposes, or has a history of, transferring money into budget categories that do not support the objectives of a project, making unwarranted purchases of products or services, or extending the project period for the sole purpose of using remaining project funds;

-- Acts as 'pass-through' grantee (i.e., a payment agent of tuition for students) rather than providing direct services and proposes diverting money designated for tuition and stipends to budget categories that do not benefit the students (or has done so in the past);

-- Has a history of not making substantial progress in accomplishing the objectives of previous projects.