January 28, 2005
TO: Chief State School Officers
FROM: Eugene W. Hickok, Deputy Secretary
SUBJECT: Extension of Liquidation Periods for Grantees under State Administered Programs
In June 2004, we wrote to your agency about the need for all State agencies to obligate and liquidate Federal education funds in a timely and effective manner to ensure that students and other program beneficiaries are served appropriately, and to avoid the unnecessary lapsing of Federal education program funds to the U.S. Treasury. Generally, liquidations must be made no later than 90 days after the end of the period for obligating funds. However, as we indicated in the June memo, in certain circumstances a request for an extension for extra time to liquidate funds may be considered in accordance with the regulations in 34 CFR 80.23 (b). The approval of these requests is at the discretion of the Department.
After carefully reviewing the requests for extensions for making liquidations in State-administered programs that we have received in recent years, we have determined that further guidance in this area would be helpful. This guidance, which is enclosed, is consistent with longstanding Department principles on the handling of such funding requests that help ensure good fiscal practices and proper accountability. For example, as indicated in the guidance, in general, if more time is needed to liquidate obligations, a request is more likely to be approved if it is submitted closer to the expiration of the original liquidation period. Additionally, a key factor in having an approvable request is including a clear statement of the reason necessitating the liquidation extension request. The enclosed policy sets forth other general standards for evaluating these requests, and a process for handling requests. Using the guidance, the appropriate program office in the Department will review and act on a request for late liquidations that is submitted within one year of the end of the so-called "Tydings period" (the period to obligate funds). If such a request is submitted later, the Office of Chief Financial Officer, in consultation with other offices, will review and act on the request.
This guidance should assist your agency with ensuring that obligations and liquidations are made in a timely manner and effectively, and in preparing requests for extensions of the liquidation period in unusual circumstances. We will also offer technical assistance if requested to assist grantees to more efficiently obligate and liquidate Federal funds and to avoid the unnecessary lapsing of expiring funds. We expect that this additional guidance and assistance will help States to submit more appropriate requests for late liquidation requests in the future, and will help the Department expedite the review of such requests.
Your vigilance is crucial to ensuring that all federal funds under your management are used to help America's neediest children do well in the classroom, and we thank you for your efforts so far to reduce unexpended fund balances. With the further guidance and the assistance to be provided, we hope the result will be better use of funds and more funds available for your students in the future. We appreciate your cooperation, and look forward to working with you in the future on these matters.