Grants Management Policy

Definition and Purpose

The definition of a grant for purposes of this policy is as follows: An award of financial assistance in the form of money or property by a funding source including the federal government, state government, other local governments, non-profit agencies, and private businesses and citizens that the County of Muskegon (the County) Board of Commissioners has the power to accept or reject.

The purpose of the grant procedures outlined in this document is:

  1. To ensure proper oversight of all funds appropriated to the County.

  2. To minimize the County's risk of non-compliance with grant requirements.

  3. To ensure proper administration and accounting of all grants.

  4. Assurance of internal compliance controls that meet the expectations for federal grant funding administration provided by OMB Super circular 2 CFR 200.

For the purposes of this policy, it’s important that definitions of grant management staff be defined as well. Both the Grants Policy, as well as the compliance supplement specifically refers to three categories of employees within a department. Terms listed below are specific to grant award activity, defined in OMB Supercircular 2 CFR 200. A department may use different employee classifications, it’s imperative that each department identify the following three equivalents on the Grant Processing Request Form to ensure compliance and accountability.

  1. Program Coordinator refers to federal grant award management staff, the employee coordinating and executing any grant related activities as documented in the federal grant contract.

  2. Program Supervisor refers to any employee overseeing federal award grant management staff, this may be a supervisor, director or elected official.

  3. Department Analyst refers to any employee responsible for the accounting of federal grant awards, this may be specific to larger departments, or it may fall within the budget staff of the Accounting Office.

All federal grant awards will require that all three staff members responsible for the management and administration of the award are listed prior to Board acceptance.

SCOPE

This policy is applicable to any County program, department, Elected Official, or division that uses the County’s central accounting system and is part of the same internal control structures as the County primary government (“Departments”). This includes component units outside the primary government, such as the Land Bank Authority and the Office of the Drain Commissioner, who are subject to the primary government’s internal controls. (This policy does not apply to the Muskegon County Road Commission, a component unit of the County whose governing board is responsible for establishing and maintaining its own separate internal control structure.) This policy covers program activities including the preparation and submission of grant applications to agencies outside the County government for funds, materials, or equipment to be received and administered by the County or by an agency for which the County acts as fiscal agent. The goals and objectives of the County Departments should be established early in the planning process and should not change based on changes in the availability of different funding sources sought and received. If grant polices and regulations conflict with regulations and policies of the County, the federal and state regulations will prevail unless less restrictive than County policies-where County policy prevails.

No grant award will be accepted that would incur management reporting costs greater than the grant amount. Such costs include, but are not limited to, indirect costs, overhead and any other items needed to administer the grant. Any unapproved submittal by any County program, department, Elected Official, or division in violation of these grant procedures shall not bind the County.

CENTRAL RESPONSIBILITY

The County Administrator authorizes the Office of Grants Coordination (OGC) to promulgate any procedures that minimize the County's risk for non-compliance with grant requirements and for providing support to requesting agencies. The OGC will maintain a supporting documentation file for all grants in order to facilitate management reporting and overall monitoring.

For Federal Grant Awards, the initiating Department is responsible to ensure compliance with the Federal Office of Budget and Management (OMB) general requirements and any other state and/or federal requirements specified in the grant conditions. All County programs, departments, Elected Officials, and divisions shall submit any/all grant information required by the OGC to carry out its oversight responsibilities.

GRANT APPLICATION PROCEDURES

The County program, department, Elected Official, or division desiring to submit a grant application soliciting funds will prepare the request as outlined by the grantor's requirements. A grant application will be reviewed by the Department(s) seeking the grant in order to make an independent assessment of all financial aspects of the application to ensure funds availability. The department applying for the grant is responsible for developing projections of all initial and ongoing direct and indirect costs associated with the grant program including but not limited to: staff wages and fringes, needed assistance for computer systems, office space, utilities, systems furniture, vehicles, office equipment, office supplies, computer software and hardware, telephone charges and/or allocations of indirect costs.

Upon the Department completing its financial assessment, the Department shall prepare and submit a completed Intent to Apply Form (Appendix A) to the OGC. A purpose of this notification to the OGC is to ensure that Departments are not competing within and outside of the County’s organizational structure. Any parties interested in applying for grant awards must follow the outlined approval process below:

  1. Grants over $25,000, federal grants, or any grant requiring cash or in-kind matching funds must be pre-approved by the County Board of Commissioners.

  2. Any County program, department, Elected Official and staff seeking grants over $25,000, federal grants or any grant requiring cash or in-kind matching funds must submit a motion to the appropriate committee and the Board of Commissioners requesting approval to submit the grant application.

All grant award acceptances must have approval from the appropriate Board committee and the County Board of Commissioners, under the provisions of this policy. This action will involve preparation of a Board of Commissioners agenda item for consideration at the next meeting of the appropriate committee and a subsequent County Board meeting. Due dates and deadlines for agenda item submission may be found on the County website.

In the event that a grant application is denied by the grantor, a copy of the letter of denial shall be forwarded to the OGC for its records. Grants that require a local match must be coordinated through the OGC. If a local match is to be provided by the County government, such funds must (a) be identified in the budget to provide the match, or (b) provided by a budget amendment.

Most grants require the submission of a program cost budget. The OGC should review this p0rtion of the grant request prior to submission. Grant applicants should contact the OGC to request a technical review of grant proposal budgets.

GRANT ACCEPTANCE PROCEDURES

Whenever possible, requests for acceptance of a grant of a recurring nature should be submitted to Budget staff for Board of Commissioners approval through the annual budget process. The grant award letter/acceptance agreement (notification received detailing the amount of the grant awarded, grant assurances and special conditions, and the guidelines that must be followed to comply with the grant requirements) will be forwarded to the OGC, who will review the grant award for reporting requirements, special conditions, and deadlines related to administering the grant.

Upon OGC approval, Departments shall prepare Board agenda materials for the appropriate committee and Board of Commissioners approval for acceptance and signature of grant contracts. Upon obtaining a copy of the Board action approving a grant, the Accounting Office will assign a chart of general ledger accounts to the grant and the applicable Department will be notified of the GL account code. For reimbursable grants, all reimbursement requests should be copied and forwarded to the Accounting Office, noting the applicable account code for the receipting of the funds. The initiating Department will notify the Treasurer’s Office (with copy to Accounting Office) of such anticipated receipts of revenue for those reimbursements made to the County.

Departments should notify the Budget staff if:

  1. There is a subsequent alteration in the funding configuration.

  2. There is a subsequent alteration in the County’s financial obligation.

  3. Grant award funds may be carried forward into the next fiscal year; official notification and budget amendment to carry forward dollars would be required.

  4. There is any notification that the grant will be terminated.

Departments are responsible for ensuring that all funds are expended or encumbered prior to the end of the grant award period.

GRANT MONITORING AND REPORTING

Grant Monitoring

Departments are responsible for continual monitoring of the financial status of grant awards. Departments must prepare, review and submit any periodic financial status reports and notify the Accounting Office promptly of any discrepancies noted and/or any additional reports needed. If any “off-system” accounting records are maintained, it is the responsibility of the Program Coordinator to ensure that the programs internal records agree to the County’s accounting records.

If grant funds have not been fully expended by fiscal year end, it is the responsibility of the Program Supervisor to notify the Accounting Office that budget funds need to be carried forward to the new fiscal year, and to confirm the amount of such carry-forwards. Carry-forwards of grant award funds will be made at the maximum allowable amount based on the grant award agreement and/or OMB Super circular 2 CFR 200 compliance supplement guidance.

Program Participant Eligibility

Federal grants awards will only benefit those individuals and/or groups of participants that are deemed to be eligible. Initial eligibility determinations will be made by the Program Coordinator following the eligibility requirements of the program. Sufficient documentation to support these determinations will be retained and made available to administration, auditors, and pass-through entities or grantor agencies, upon request. It is the responsibility of the Program Coordinator to maintain complete, accurate, and organized records to support eligibility determinations

Grant Reporting

The requesting Department generally manages the program activities of a grant award and is therefore responsible for providing financial status reports and other reports to grantor agency and/or pass-through entity. If it is requested that the preparation of grant financial reports be handled by the Accounting Office, this must be indicated on the Grant Processing Request Form. Departments handling grant reporting are responsible for timely compliance with all reporting requirements of the grant including financial reporting and proper preparation and submission of drawdown requests for reimbursement of authorized grant expenditures. The drawdown reimbursement request mechanism is preferred over the payment-in-advance mechanism for receiving grant award payments. Drawdown requests for cash reimbursement of allowable grant expenditures must be made at least monthly, unless an alternative longer interval is specified and permitted under a specific grant award. Drawdown reimbursement requests must be substantiated by sufficient support to justify the request, including general ledger reporting that reconciles (a) recorded grant expenditures and (b) recorded grant revenues to (c) the drawdown amount requested. A drawdown request is a financial transaction that generates a receivable from the awarding agency or pass-through entity, therefore a journal entry to record the grant revenue and receivable should be prepared at the time the draw request is made and submitted immediately for review and posting to the Accounting Office, with copy to the Treasurer’s Office. All supporting documentation must be attached to the accrual journal entry, including general ledger reporting, copies of final signed (paper) or submitted (online) financial status reports, and agency/pass-through entity confirmations received. All cash receipts from grant award should always be credited to the receivable from the awarding agency or pass-through entity that is established at the time of the draw request. Audit-preparation work papers should be provided to assist the Accounting Office in completion of federal and/or state grant award summaries on a timely basis.

INDIRECT COSTS

It is County policy for Grant applicants to request reimbursement of central services indirect costs unless reimbursement of indirect cost is specifically prohibited. The Accounting Office develops a County-wide Central Services Indirect Cost Allocation Plan that is used by the County to claim indirect costs as charges against grant awards and contracts. The Indirect Cost Plan is prepared based on audited expenditures from the second preceding year in compliance with the Federal Office of Management and Budget regulations. For the first two fiscal years of a grant award, departments should contact the OGC for assistance with identifying and calculating indirect costs for inclusion in grant applications. The agreed upon rate for all federal award contracts to entities without a negotiated indirect rate is 10%, however the County’s Indirect Cost Plan preparer may be able to provide justification for a higher rate for the initial two years of a federal award’s activities.

PERSONNEL

Any new personnel positions to be created as a result of grant funding must be approved by the County Board and properly classified by Human Resources. Where employees are expected to work solely on a single Federal award or cost objective, charges for their salaries and wages will be supported by periodic certifications – at least semiannually – that the employees worked solely on that program for the period covered by the certification. These certifications must be prepared at least semi-annually and be signed by the employee or supervisory official having firsthand knowledge of the work performed by the employee.

Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. If an employee works on multiple cost objectives, the preferred method of documentation is for salaries and wages to be supported by Personnel Activity Reports (PARs). An employee is considered to work on multiple cost objectives if they work on:

  1. more than one Federal award

  2. a Federal award and a non-Federal award

  3. a Federal award with specific earmarking (set-asides) or matching requirements

  4. an indirect cost activity and a direct cost activity

  5. two or more indirect activities which are allocated using different allocation bases; or

  6. an unallowable activity and a direct or indirect cost activity

For employees working on multiple cost objectives, PARs must reflect the following standards:

  1. After-the-fact record: The PAR must be created after the work has been executed. Projections of how an employee is expected to work or position descriptions would not be sufficient.

  2. Total activity: The PAR must account for the total activity for which each employee is compensated, including part-time schedules or overtime.

  3. Monthly: The PAR must be prepared at least monthly and must coincide with one or more pay periods; and

  4. Signed and dated: The PAR must be signed and dated by the employee and supervisor.

If an employee wishes to use a method other than semi-annual certification for PARs they must obtain prior approval from OGC and maintain alternate records that accurately reflect the work performed in compliance with section 430(I) of 2 CFR 200. It is never permissible to for salaries and wages to be charged to federal grant awards based solely on budget percentages or budget amounts.

GRANT-RELATED PROCUREMENT AND POLICY ISSUES

The County’s Purchasing Office must be notified that federal funds are involved for all purchases using Federal grant award funding, regardless of the dollar amount involved. Any purchases, of any amount, made with Federal grant award funds must comply with the following requirement:

A copy of the required certification related to the suspension and disbarment of the vendor MUST be obtained before any funds are spent. This copy must be kept with the grant file, and be available for when requested by auditors. This information is available on the System for Award Management web page and can be accessed at the following address: SAM.gov

The Accounting Office also needs to be notified so that assets acquired using federal funds can be properly identified. Equipment items purchased with Federal grant award that cost $5,000 or more are to be tagged when purchased so that proper disposal procedures may be followed when items are sold or sent to surplus. Federal equipment should be inventoried annually in order to be properly safeguarded against theft, damage, or loss. Also, land purchases made with grant funds often have land use restrictions which will be discussed with Corporate Counsel to ensure restriction compliance. When assets acquired with Federal grant awards are no longer used in the grant program (i.e., grant has expired, asset was lost, stolen, or damaged, or asset became idle) the grantor must be notified. The Federal Government may be due a portion of the proceeds for equipment items with a book value of $5,000 or more at the time of disposition. If the federal agency is compensated for the current fair market value of the item, the equipment may be retained by the agency.

Grantees should follow the County’s and/or grantor’s policies and procedures for all practices including procurement for the selection of contractors and vendors. If grant applications have special conditions, a copy of such must be given to the Accounting Office and OGC for assistance in compliance monitoring. If grant guidelines require grantees to abide by different procurement procedures other than those adopted by the County, the grantee should resolve the situation with the Accounting Office prior to submitting the application. Generally, the federal and state regulations prevail unless less restrictive than County policies-where County policy prevails.

CLASSIFICATION OF PROGRAM INCOME

All Federal, state and local grant revenue should be recorded as revenue (not, for example, as a refund of expenditures) in compliance with generally accepted accounting principles (GAAP) and grant requirements. Budget appropriations for grant expenditures are obtained by way of Board action. Any Program Income (as defined in §200.307 of the Super Circular) that is earned by a federal grant award program shall be used in the manner stipulated by the terms and conditions of the federal award. Ordinarily, unless instructions to the contrary are received from the Federal agency or pass-through entity, Program Income must be deducted from total allowable costs to determine the net allowable costs. In this circumstance, Program Income must be used for current costs unless the Federal awarding agency authorizes otherwise.

YEAR-END PROCEDURES

All accounts payable invoices for goods or services received near the end of the fiscal year should be processed for payment promptly. Expenditures paid after September 30 for goods or services received on or before September 30 should be coded with a post date in September, so that the Accounts Payable system will accrue the expenditure and trade payable. It is important that a final draw be calculated, documented, submitted and accrued as close to September 30 as possible so that the grant award revenue is recorded in the appropriate period as the related expenses as soon as possible, so that the general ledger will properly reflect the nature of grant balances and transactions.

PDF Documents

  1. Grants Management Policy

  2. Compliance Supplemental

  3. Intent to Apply Form - Fillable PDF

  4. Grant Processing Request Form - Fillable PDF

  5. Muskegon County Accounting Cash Management Policy