Navigating Federal Grants in 2023 | Insights and Changes

Our learning objectives for today are to obtain a working knowledge of some federal programs, so the Broadband School-Based Medicaid and Solar For All. We'll identify some of the key changes to the State and Local Fiscal Recovery Fund Program, and then also understand how the proposed revisions to uniform guidance are going to impact us going forward for federal grants management.

I'll be kicking us off first with the Broadband Equity, Access, and Deployment program. Let's get started. This presentation for the Broadband Equity, Access, and Development program is also known as BEAD, so I'll be saying BEAD throughout the rest of the presentation here. We'll begin with a brief overview of the program, then we'll discuss the eligible uses that are outlined in the notice of funding opportunities, and then also how to navigate the challenges of that program.

Let's talk about the program first. This was established by the Infrastructure Investment and Jobs Act where they allocated over $40 billion to make sure that we could get high speed broadband access to all unserved and underserved Americans across the United States. States are tasked with formulating individual plans under this program to financially support the expansion of broadband in their unserved and underserved communities. This process involves states developing and executing plans to allocate these funds, encourages providers to extend infrastructure to areas like sparsely populated rural communities that lack private broadband investment without this federal support. The National Telecommunications and Information Administration, the NTIA, is the federal agency that oversees this program, and so this has been an expansion of their federal scope. This expansion includes considerations of middle class affordability and a preference for union labor and municipally operated broadband projects as well.

With all federal funding comes eligible uses. We really want to talk about six specific eligible uses to the NTIA, who falls under the US Department of Commerce, release the notice of funding opportunity back in May of 2022. All states and territories are eligible for this program and they've all completed and are working on action plans and initial proposals. Those proposals are out for public comment, some of the public comment periods have also ended. Let's talk a little bit about some of these federal programs.

The first of these is you can use it for broadband network facilities for deployment upgrades. This also includes the Middle Mile Infrastructure Program. That's going to be a theme throughout is that there's other ways to combine programs and combine funding. The second available funding source is the Community Anchor Institution Service Enhancement. What's a community anchor institution? This is a school, a library, a health center, a higher education. You can use funding to deploy or upgrade broadband facilities to improve services to those eligible community anchor institutions. There's also the potential for that Middle Mile Infrastructure Program for project feasibility and sustainability work as well. The third eligible use of federal funding is data collection, mapping, and planning. Undertaking those three areas of data collection, broadband mapping, and planning beyond the initial allocation to support these BEAD program goals.

The fourth one is residential internet infrastructure installation, so this is to install internet and wifi infrastructure or provide reduced cost broadband in multifamily residential buildings. Priority is given to buildings with a significant number of unserved households or areas with a higher percentage of low-income individuals.

The fifth eligible use of this federal funding is broadband adoption initiatives. These are programs to encourage broadband adoption, and it includes initiatives for affordable internet capable devices. The sixth major area of eligible use is to be used for training and workforce development, and this is to support workforce development programs to enhance broadband related skills. This will be important when we talk later about potential supply chain and supply chain disruption in the area of broadband. Finally, there's a seventh area for other digital equity programs that can be proposed by eligible entities like states or territories, but they are subject to advanced written approval. If your state or your community anchor institution or an eligible entity has a program that you would like to be considered to be funded, anything that is not listed in one of the other six categories does have to be approved by the federal program officer.

All right, so let's talk about the broadband providers. This is going to be the group that's actually going to be implementing these programs. The funds come to the state and to the territories, but the broadband providers are going to be the folks on the ground, so it's really important to engage them early. Here's a series of suggestions that we want to make sure that we're working with our broadband providers early and that we're making sure that they're engaged. The providers that are aiming to apply for the BEAD program are advised to start their preparations early. If we have any broadband providers on the call today, it's very important that you start thinking about these programs. If you're going to be supporting your broadband providers, you need to start understanding those BEAD requirements, really having a great understanding of the federal requirements and also your state proposals.

One of the things that's come up recently, so Letter of Credit is a requirement of the BEAD program. However, as with many new federal programs, things change pretty quickly. Just last month, the NTIA who manages the broadband program released a waiver for the Letter of Credit considerations, so there's now four alternatives to providing a Letter of Credit. I give you that example because with new federal programs, guidance changes very often and all the time, and so you have to be staying on top of the new guidance, any kind of FAQs, any new guidance or letters that are issued.

The next area to really pay attention to is the Build America by America. This is called BABA. This is a compliance requirement that aims to allocate 55% of component costs of infrastructure projects to American suppliers. This goes for a lot of different infrastructure projects that are coming out of the Infrastructure Investment and Jobs Act, so this is an entirely new provision that we also have to be compliant with. This program has a matching funds requirement, so you must match at least 25% in cash or in kind, and states can explore how to use other sources for matching. Your internet service providers are going to be thinking about ways that they can also match.

Then the last three here, number seven, eight, and nine, so really thinking about there's a lot of other considerations like the high cost per location threshold, maintaining a competitive edge as an internet service provider, things like unlicensed, fixed wireless considerations. There's a lot to consider if you're a broadband provider in this space or if you're going to be supporting broadband providers either in a consulting capacity or you're working for a state agency or an eligible anchor institution. There's a lot of considerations and time is of the essence, so we want to make sure our providers are not delayed and really starting to think about this.

Okay, so how do we build a successful program? We all like a good little roadmap. For a successful program, it's really important to navigate the complexities. As we just discussed, federal programs are complex from the start, and especially a brand new federal program where we're trying to roll out something that's never been done before. Really thinking about managing the growth of our program, understanding how we're going to scale. These are large programs, they're done at a state level. Some of our states have over $1 billion allocated to them. State agencies that don't have broadband offices who are just starting to stand those up are going to need a lot of resources to help them scale. We want to make sure that we're crafting a comprehensive data strategy, so we really have to pay attention to what data is required, what data is being put out by the federal agency, and what we're going to need to report on.

Next is an all-encompassing stakeholder engagement plan. There's going to be a lot of stakeholders. This is a broadband-for-all program, and so we're looking to provide broadband to unserved and underserved Americans across the entire nation, so every state is going to be working through stakeholder engagement. Another factor that we really want to address is that early compliance work. Understanding what the federal program is, understanding what we're going to have to do from a compliance standpoint, that leads us into clearly defined terms. Again, going back to the federal guidance, understanding what those rules are, and then making sure that we understand the terms in our state plans and how those would apply to whatever role we're playing in that federal program. Here's Build America By America again. This is one where we're going to have to make sure that our program addresses this, our program guidance policies and procedures addresses this.

Also, we want to make sure that as we lead into Build America By America, there potentially could be supply chain disruptions. We have a national scale program that's never been done before, it's specific to an industry, to broadband internet service providers, those that provide commodities to that area. Start thinking about our supply chain, thinking about who our service providers are as. Every state is working through this process, the first states to get up and running are going to be the first states that have vendors available. Thinking about that in terms of your own state or your own communities and where you guys are in the program, what is this going to look like six or nine months from now when a lot of internet service providers and a lot of those materials are being utilized by other states? Then, finally driving accountability. We want to make sure that our program, that we're utilizing the funds responsibly. The program leaders, the consultants, the service providers, and the stakeholders, we all have responsibility related to compliance and being accountable for these federal dollars.

All right, so we'll move on to those high-level areas of focus. We've talked specifically about broadband, some of the key challenges with that. As we're thinking about managing federal programs, there's a few areas that are pretty consistent across any kind of federal program, whether it's broadband or any other federal program that you're running. First, you want to initiate. You've got to develop that strategy, you've got to understand what the program is. You want to make sure that you've got strategic partners in place and that you've got folks who can really take that deep dive in understanding what the program is. Then, you begin your planning phase. You want to identify your goals, get your team in place, really understand regardless of what role you're playing in a federal program, if you're a recipient of federal funds, if you're managing that federal program at a state or a county or a parish level, making sure that you've got that planning done.

Then, the big piece of this is the executing. Make sure you've got the right team in place for management and oversight. You're going to be executing... In the case of this BEAD program, you're going to execute on the state plan. This is where you're going to be engaging with applicants, you're going to be engaging with your internet service providers, with other stakeholders. You want to make sure you've got all of your team members in place to provide proper oversight. As your program gets underway, you've got to do a lot of monitoring and internal controls. You want to really start with compliance. This is where your compliance checks are. You've built a program, it's compliant with the federal regulations in your state plans, and you've got to move into that monitoring piece. Whether you're monitoring the ISPs to make sure that they're meeting the program goals, you're monitoring your own program, you really want to make sure that you're setting yourself up for success there.

Then finally, closeout. These are large multi-year programs, not just BEAD, but some of the other ones that we're going to hear about today, so you want to start thinking about closeout at the beginning. Closeout doesn't happen 90 days prior to the end of your award. You want to really start thinking about what are the documents that I have to maintain, where is the data going to go? Making sure that you've got the proper reporting mechanisms in place so that you can be ready for closeout when the time comes.

Moving on to thinking about this program, some key takeaways just for a successful program, whether it's for state broadband or any of the other programs that we're going to talk about. The first one is program administration. Managing the allocation of federal funds, of course, is very, very critical. We have to ensure quality and accuracy. We have to ensure adherence to the program requirements. We want to make sure we're looking and leveraging available funds. If there are other match requirements, some of our federal programs are able to be matched with other federal programs, that's very different from how most federal grant programs work.

Also, financial management reporting. This goes into that compliance piece and the execution piece, making sure that we're actively monitoring and planning for the documentation, the compliance that needs to be in place, staying abreast of the frequently asked questions, the new changes. Those are things that have, just like I mentioned earlier with a Letter of Credit, so that's built into the federal program. NTIA received a lot of feedback about that particular requirement, and they've issued a waiver that has some different options for people to work through. As we move into audit readiness, so really getting ready for those auditors, thinking about the audit when you start, so just a minute ago I said think about the closeout, also really start thinking about that audit. You want to think about that when you're first starting a program.

Compliance reviews, that's part of that monitoring process, really making sure that you're conducting reviews of your planned projects, making sure that they're compliant with uniform guidance. If there's any kind of noncompliance areas that you've identified either through monitoring or risk assessment, you have to have a path to address those potential issues of noncompliance.

Then finally, under uniform guidance, so one of my colleagues is going to spend a good bit of time with you guys today talking about uniform guidance, but we want to make sure that we have proper policies and procedures in place when we're starting a program, and sometimes we have to make updates to those. Already our experience with NTIA is that they are looking for and want evidence of compliant, well-developed written policies and procedures before they're going to approve your state's applications. We're already supporting the drafting of these compliant policies and procedures for state broadband programs, because NTIA wants to see that all of those are in place prior to releasing those funds.

We've covered a lot. The state broadband program, the BEAD program, is an exceptional program that aims to deliver on unserved and underserved broadband across the country. We're proud to be assisting on this program and to be able to provide a little bit of information to you guys about it. Next, I will actually be turning it over to my colleague, Sarah Irvin, and she's going to be talking about a new federal program, another big federal program called Solar For All.

Sarah Irvin:

Good morning. Thank you, Jennifer. I just want to, first and foremost, say thank you for your time today. I'm very excited to be here and to talk to all of you about the Solar For All grant competition, and a competition that it is, certainly. First, we're going to start off by a couple of my agenda items. I'm going to cover the overview of the Greenhouse Gas Reduction Fund and some additional applicable acts today, some program objectives, the competition timeline, our eligible recipients, technology categories, and activities for use of funds, our award options and sizes, a small overview of procurement requirements, and then some key takeaways today. Of course, the learning objective today is to obtain a great working knowledge of this program, this competition. Again, it was created by the Inflation Reduction Act, the Greenhouse Gas Reduction Fund, and is administered by the US EPA.

All right. I want to provide a brief overview of the Greenhouse Gas Reduction Fund. The Inflation Reduction Act authorized the United States EPA to implement the Greenhouse Gas Reduction Fund, which is a $27 billion investment to mobilize financing and private capital to combat the climate crisis and to ensure that there is economic competitiveness today. The Greenhouse Gas Reduction Fund will deliver low energy costs and economic revitalization to communities, particularly those that have historically been left behind in underserved communities. That is the focus. The GGRF, if you will, will be implemented in three grant competitions. While we're talking about the Solar For All competition today, I do want to touch on the other two. The first one is the $14 billion National Clean Investment Fund. The second is a $6 billion Clean Communities Investment Accelerator program. Lastly, we have the $7 billion Solar For All Competition, which is what we're talking about today.

The Greenhouse Gas Reduction Fund will be designed to achieve the following program objectives, regardless of which program you are participating in or a part of or assisting on, so the objectives remain the same. The first one is, of course, reducing greenhouse gas emissions and other air pollutants. The second one is to deliver the benefits of greenhouse gas and air pollution reducing projects to American communities. Again, and you're going to hear me say this a number of times, the focus is in low income and disadvantaged communities, typically those that are left behind. Number three is to mobilize financing and private capital to stimulate additional deployment of these greenhouse gas reducing projects.

All right. I know Jen touched on this just a touch earlier, but there are additional acts that will apply to the Solar For All program, and so the grantees will be subject to administrative and national policy requirements. The EPA does plan to establish programmatic requirements in the terms and conditions of the grant award to implement these administrative and national policy requirements. They will include these two acts that I'll briefly touch on, but there will be others as well. The first one, Build America By America, BABA, the By America preference requirement applies to all the iron and steel manufactured products and construction materials used for the infrastructure project under an award for identified EPA financial assistance funding programs. The second act is the Davis-Bacon and Related Acts. Here the DBA Labor standards and reporting requirements also apply to projects associated with grants or assisted with grants associated by the Clean Air Act as provided in section 314 of the Clean Air Act. Again, additional two acts, certainly not limited to just these two, but the EPA will be providing additional guidance on that.

All right, next up. As I mentioned before, there are three main program objectives for Solar For All. The first one, of course, reduce greenhouse gas emissions and other air pollutants. The intention here is that the Solar For All grantees will deploy and enable deployment of residential-serving solar storage and enabling upgrades across the country, doing this directly supporting the climate goal of the United States to achieve a carbon pollution-free electricity sector by 2035. Our second objective is to deliver the benefits of greenhouse gas and air pollution reducing projects to American communities, again, particularly low income and disadvantaged communities. All Solar For All funds will enable low income and disadvantaged communities to deploy and benefit from distributed solar. The EPA expects Solar For All grantees will deliver meaningful benefits such as household savings, of course, quality jobs, and community ownership to American communities and households. The EPA expects Solar For All grantees to maximize the breadth and diversity of households served in this program, again, the focus is really on those communities typically left behind.

Number three, mobilizing financing and private capital to stimulate additional deployment of greenhouse gas and air pollution reducing projects. Solar For All grantees will stimulate or expected to stimulate additional deployment of solar by strengthening the overall market for residential-serving solar by providing access to low cost capital, creating project deployment services such as community outreach, workforce development, and developing favorable market environments for low income and disadvantaged communities to deploy and benefit from solar across the country.

All right, so let's take a look at our competition timeline. I mentioned it is a competition, that it is. There have been hundreds of Notice of Intents submitted by eligible grantees and the EPA is only issuing 60 awards. We'll talk a little bit more about that in a little bit. It is a tight competition, for sure. Our timeline looks like this. In June, the applications open via Notice of Funding opportunity. In July 31st, those Notice of Intents were due for states, the District of Columbia, and Puerto Rico. August 14th, the Notice of Intents were due for territories, municipalities, and eligible nonprofit recipients.

Now, our applications were due October 12th. They were originally due in September, but the EPA made some pretty significant changes to the application process, and so they gave us a few extra weeks to get our applications in. Applications were due in October, and currently where we stand today is between now and the summer of next year. The EPA is reviewing the applications, working through terms and conditions, and selections will be made and announced. In July, that's when the EPA expects that the anticipated awards will be made and grantees will be made aware that they received funding. Then of course, by the end of September, there's a statutory obligation to obligate all the funds to all the grantees. I know that this seems quite a ways away, but it is going to come quickly.

All right, so let's talk a little bit about who the grantees are and our eligible applicants. The EPA will award grants to states, territories, travel governments, municipalities, and eligible nonprofits. The expectation here is that they are creating long-lasting programs that provide financial and technical assistance to rooftop solar projects in residential-serving solar communities. I think what's important here is that there are a lot of solar programs out there today. This Solar For All program specifically focuses on residential only, and the funding can be used to complement and support additional residential existing Solar For All programs, or it can be used to stand up a new program. The expectation is that 100% of program funds must enable low-income and disadvantaged communities to deploy and benefit from residential distributed solar. We talked about long-lasting programs. What does that mean? What does that look like-?

We talked about long-lasting programs, what does that mean? What does that look like? What are the expectations there? There are a couple that the EPA has come out and told us. The first one, provide grants and loans and other forms of financial assistance to rooftop residential and residential serving solar projects. Number two is we're going to support communities to deploy rooftop and residential serving community solar by providing technical assistance such as there's going to be a lot of communication interfacing with utilities, so providing that assistance, workforce development, project deployment support, et cetera. The third one is to address policy and regulatory barriers to residential distributed solar and to leverage existing favorable policies. Again, it's going to be a challenge working with the stakeholders, especially the utility companies on policies related to third party ownership and net metering.

All right, let's talk about our eligible technology categories. There are four, and the first one is residential rooftop solar. What does that mean exactly? That going to be assets which support households and single family homes, manufactured homes, or multifamily buildings. Our second one is residential serving community solar, so facilities that deliver at least 50% of the electricity generated by the facility to residential customers in the same utility territory as that facility. Number three, associated storage. Storage infrastructure should be deployed in conjunction with a residential solar project to maximize the program benefits. Then lastly, enabling upgrades. Financial assistance for enabling upgrades should be no more than 20% of financial assistance during the program period. There's going to be funding available to enable upgrades so that these homeowners, et cetera have the opportunity to actually add solar. There could be some things that need to be done in order to have solar. Roof repairs, other energy efficiency changes and enhancements so that they can become part of this program.

All right, so let's talk about the actual grant use of funds. As I previously stated, funds may be used for financial and technical assistance and necessary administration. What does that look like here? One of the categories, financial assistance, so financial payments of course to residential distributed solar projects consistent with the federal financial assistance guidance. Examples as I have on the screen here would be subgrants rebates, various debt verticals. Next up, project deployment technical assistance. We're talking about here, services and tools provided by grantees to communities and energy stakeholders to overcome the non-financial barriers to solar deployments. Again, utility coordination, that's going to be a huge one. Project deployment assistance and then workforce deployment programs, and of course customer outreach and education. This is a very large category, very important. The third one, we have program administration. Equally, as important. The funds and expenditures necessary and reasonable for the performance of the award consistent with the guidance. Staff for administration, financial assistance for reporting, underwriting, managing the program, a things of that nature. That is certainly a category, very important that is allowable.

All right. The EPA aims to ensure a minimum of 20% household savings, but what exactly does that mean? There's two benefits that can be delivered and defined as household savings. The first one I have up here, probably the most obvious one is the direct financial benefit, which means 20% of household savings is 20% of the average household electricity bill of the average household in the utility territory. The good news here is the benefit does not need to be calculated per each individual household. The second is the non-direct financial benefit. A little more challenging, a little more complicated, but this is for individuals without a utility bill will be compared to an equivalent 20% of the average electricity utility bill and that households utility territory.

What's good here, and very helpful obviously, which will be needed, is that the US Department of Housing and Urban Development has provided an example list of potential equivalent benefits for us to gauge that off of. Each applicant will need to design a financial subsidy or product that delivers the financial benefit or the equivalent to all households served under this program. The applications that do not provide at least 20% household savings, that program will be evaluated less favorably than an application that commits to delivering at least 20% if not more. That's again, that speaks directly back to the competitiveness of this program and the expectations set by the EPA.

All right. We have three award options, and again, this is defined by the applicant's geographic scope of work. Our first award here is state and territory programs. The EPA is an award up to 56. Now that's up to, again, we only have 60 grants that are going to be issued. Within award bucket number one, up to 56. Award bucket number two for American Indian and Alaska native programs, they're going to award up to five. Then award bucket number three for multi-state programs, they're going to award up to 10. That means serving similar communities in multiple states. Again, tight, tight competition here. As you can see here, the eligibility and who's applicable by award category.

All right. Let's talk about our award sizes. The EPA has defined the awards in three programs, small, medium, and large. Our small program as you see here, is the award range is going to be 25 up to $100 million. The requirement here to fit into the small program category is that the program is serving the disadvantaged population of fewer than 1 million people. The medium-sized program is going to be award range of 100 million up to $250 million. Very large, they're all very large. The disadvantaged population that is required to be served here is between 1 million and 5 million people. Then we have our large program. We're looking at $250 million program and up to a $400 million program award or grant. The disadvantaged population here that the program must serve is greater than 5 million people. A lot of opportunity here. These awards, while you may be a part of the small program, is significant and substantial.

All right, so I'm going to just briefly touch on the summary of procurement requirements. Jennifer also mentioned this, but my colleague Angie is going to do a deep dive into uniform guidance. What I wanted to call out here that's really important is that this program does fall under that guidance and the EPA has posted a best practice guide for procuring services, supplies and equipment under the EPA assistance agreements as guidance for other recipients and sub-recipients of states. That's going to be very helpful in the months to come, for sure. I believe we should be coming up on our second polling question.

Pollin Question #2.

Sarah Irvin:

Excellent, thank you. Okay, now to wrap up, I have a couple of key takeaways that I think are most beneficial for y'all today. Again, the EPAs awarded up to 60 grants for a total of $7 billion to states, territories, tribal governments, municipalities, and eligible nonprofits. Only 60. We know today that there were hundreds that submitted a notice of intent. Again, it's going to be a tight competition. The program should guarantee a minimum 20% total electricity bill savings for household. That is a requirement and applications will be evaluated heavily on that. The focus is on residential solar only existing programs or new programs that will be stood up with these grants. This program closes the equity gap in solar for all energy or in solar energy, excuse me. There typically is an underserved population and disadvantaged population that doesn't get to take advantage of access to things such as solar.

Lastly, and one that I find very exciting is there is no cost sharing or matching, not required. As you heard previously from Jennifer. That is required on the bead program. That is not required here. There are a lot of energy programs out there right now that do require cost sharing or matching, and that is challenging, especially for the populations we're aiming to serve here. That is a very exciting takeaway from the Solar for All program. All right, well thank you so much and I'm going to turn it now over to my colleague, Jason.

Jason Coker:

The updates to school-based Medicaid programs and compliance deadlines.

School-based Medicaid provides funding in schools for medical related services provided to students that are Medicaid eligible. The program was authorized by the Individuals with Disabilities Education Act or IDEA in 1990. It was authorized in 2005. The reason why this is important now is there was a bill that was passed in 2022 that requires updates to state school-based claiming programs. The school-based claiming program is generally a reimbursement program. Most states run a fee for service, which means you provide a service, you submit a bill for that service, you get reimbursed for that service. Other states are running a cost-based program, which is a little bit more complicated. It requires a cost report and cost allocation methodologies. Very few states, I think two or three states have school-based Medicaid under the Managed Care program.

Part of the Safer Communities Act passed in June of 2022 required CMS, Centers for Medicaid & Medicare, to issue comprehensive guidance related to school-based Medicaid. The prior guidance was issued in 2003, so over 20 years had gone by since CMS has updated school-based Medicaid. The new guidance issued by CMS provided flexibility, provides flexibility for states to make the school-based Medicaid easier or make that reimbursement easier for providers and local school districts. That does somewhat add some complexity and some burden on the states, but it should increase participation in smaller and rural school districts. Some of the things that are a part of the Safer Communities Act is required. I think we're going to move into a polling question and we'll get into some of those requirements after our polling question. Come on.

Polling Question #3.

Jason Coker:

Thank you. I believe every state now is participating in school-based Medicaid. Depending on when you last updated your state plan amendment depends on how intense the changes recommended by CMS is going to be. CMS recommends every state review their state plan no matter when their state plan was last approved. Some of the requirements that CMS has issued will require state plan changes in some states. Most of those required changes CMS has made, centers around the cost allocation methodology used in a cost-based program. They're requiring changes to your time study, which is the methodology that most states use.

The guidance is trying to ensure that all medical services are covered in schools. Services in schools are generally broken into two different categories. The two categories are medical related services or educational related services. CMS is covering medical related services. For instance, if a student has a problem reading, that's an educational related service. If a student needs glasses, that is a medical related service that could affect their reading. These are medical related services that allow a student to participate in school. The other thing that's emphasized in the guidance is to provide all medical related services for all Medicaid eligible students, not just students in special education. This is a pretty major change that's happened over the last eight years or so.

For any of the required changes that came about in the guidance, all changes must be made prior to the first quarter of 2026. I know that seems like a really long way away, but it does require states to start on their state plan. Generally this takes a number of months to go through this process. You can't start on it in 2026. This is something that you probably want to start looking into now if you haven't already. Just understand that the timeline is pretty extensive for making any changes to your state plan. CMS also suggests meeting with various stakeholders as you're updating your state plan. You want to make sure that this is a onetime plan to where you're not making these changes often. You want to talk to all stakeholders, you want to include service providers, you want to include all the way down to school district level individuals to get their input on how to make this program work best for them. They're going to be the end users of this. Okay, and now we're turning this over to my colleague Corey Jambon.

Corey Jambon:

Thank you, Jason. Good morning. My name is Corey Jambon, I'm a part of the government services leadership team. My team focuses on grants management for large federal programs and program administration. Appreciate the opportunity to speak with you this morning and provide some overviews and some updates on the state and local fiscal recovery refund. In my slides, I'm going to provide an overview of the two recent changes to the interim final rule that were published by Treasury in September, and then also a couple of weeks ago in November. We'll go through some of the key highlights and takeaways from that and then finish up with some considerations and strategies for grant recipients as we're approaching the end of 2023 and looking into the final obligation year of 2024.

Okay, so as I mentioned, I'll touch on the September 2023 interim final rule. Really, the updates in this interim final rule were the addition of three new eligible use categories intended to increase the flexibility for grant recipients. I will hit on a couple of points for the November 2023 obligation interim final rule. This was focused on amendments to the definition of obligation, and also provided two other updates specific to clarification on who is required to be compliant with the obligation deadline and then also some options and flexibility for recipients if they need to amend or change contracts and subrecipients.

Okay, so as I mentioned, the September interim final rule added three new eligible use categories. They added an emergency relief from natural disasters, surface transportation projects related to Department of Transportation, and then Title I projects for HUD CDBG programs. As it relates to the natural disaster, Treasury guidance outlined a two-step process. The first step is identifying the natural disaster, and so they allow for declarations for natural disasters that happened in the past, that are present, and then also have a threat of imminent danger in the future. Once you identify the natural disaster, the second step is the funds need to be related to that disaster and proportional to the impact. A lot of the other eligible use categories have some requirements around proportional, and so those apply to this new eligible use category as well. Treasury listed several examples that are presented here, emergency housing, financial assistance, food assistance, debris removal, cash assistance, and mitigation activities. What's important is this emergency relief from natural disasters eligible use, it did not change the authority for the non-federal match requirements.

Okay, the second new eligible use was the surface transportation projects. This was intended for recipients to use the funds for infrastructure projects, certain programs administered by the Department of Transportation. Treasury provided three pathways which are listed here under this eligible use category. Pathway number one relates to existing DOT projects that have not received funding but are expected to receive funding by the obligation deadline of December 31st, 2024. The funds are intended to address expanded scope, unexpected costs, or supplement funding.

The second pathway is related to a DOTD raise program, which is Rebuilding American Infrastructure and Sustainability and Equity program. It's intended to provide a framework for the use of these funds for expenses and cost aligned to categorical exclusions by DOTD. There is a funding limit. It cannot exceed $10 million in this pathway. The third pathway for the surface transportation projects relates to another DOTD program or DOT program, TIFIA, which is the Transportation Infrastructure Finance and Innovation Act. It's intended to assist with loan repayments for the other grant programs listed here, INFRA, which is the Infrastructure for Rebuilding America grant, the fixed guideway mega grants, and other eligible grant assistance programs.

Okay, the third new eligible use in the September interim final rule is related to Housing and Community Development Act of 1974. This allows recipients to use funds for eligible HUD CDBG and ICDBG programs. You can meet the non-federal match requirement, which is helpful. It is intended to provide supplemental assistance. The second and third new eligible use categories do have some additional requirements that are important. The funding limits cannot exceed $10 million or 30% of the allocation. The expenditure deadlines for these two new eligible use categories are pulled forward to September 30th, 2026. Treasury requirements have a stipulation to supplement not supplant. You can't replace previously obligated funds and you cannot use these funds to replace federal or non-federal funds.

That wraps up the key changes in the September interim final rule. Now I'll talk a little bit about the November 2023 obligation interim final rule. This was released probably about three weeks ago. There's a couple of things that didn't change. The original eligible use categories, and then the recently added eligible use categories in the September IFR remain unchanged. The November obligation interim final rule did not change any obligation or expenditure deadlines.

What did change? As I mentioned, the intent was to provide additional flexibility, provide that clarification about the obligation deadline to subrecipients, which I'll speak about, and provide guidance for amendments or replacements of contracts. The first piece is the term obligation. The Treasury is clear that the definition of obligation continues to mean order placed for property or services enter into contracts, sub-awards, or other contractual arrangements. They recognize that because of the receipts of these funds are burdened with a tremendous amount of compliance required activities, and so they amended the definition to consider an obligation by the recipient because of the federal laws and regulations that are in the award terms and conditions. They have provided six examples of covered costs. Reporting and compliance, single audit costs. Most of the recipients have gone through their first year of single audit. There's some document retention, and then there's three areas of additional compliance as it relates to uniform guidance, environmental, and then the civil rights.

If a recipient intends to use funds for the compliance related obligation, Treasury outlined a four step process. The first step is we need to determine and estimate the amount of funds that we would like to obligate for these compliance related activities. What's important to recognize here is that there's cost reasonableness principles in 2 CFR 200 that apply. The first step is estimating the obligation, then we need to document the justification, step two. Step three is the Treasury is requiring the reporting of this obligation by April 30th, 2024. At closeout, we need to account for all the final expended costs and any unused obligated funds would be returned to Treasury.

Okay, the second area of the November obligation IFR was providing clarity around the obligation deadline. They confirmed that the recipient is responsible for the compliance with the December 31st, 2024 obligation deadline. However, this is not applicable to subrecipients or contractors. The recipient's agreement with that subrecipient or contractor denotes the obligation and in compliance with the December 31 period.

The last piece of the November update spoke to what happens if recipients need to amend or replace a contract. They provided three examples of why that might take place. The first example is the recipient terminates for reason. This could be because of contractor or sub-recipient default. The contractor sub-recipient goes out of business or they're unable to perform and carry out the obligation and the services. The second piece is if it's mutually agreed that the recipient and the contractor want to terminate the agreement. The third is that the recipient terminates the contractor sub-award for convenience. Treasury provides examples here about, an example would be that it was not properly procured. An example would be that it was not properly procured. And in that situation, Treasury requires that there's clear evidence that's documented for the determination, and also that the... So as I mentioned, the recipients are required to expend the funds by the deadline for the replacement contract. We need to update the Treasury reporting. In the portal, Treasury commented that they will release updated compliance and reporting guidelines, and then all of the documentation that was maintained to justify the amendment or the replacement should be retained for closeout procedures.

Okay. So as we're approaching the end of the 2023 period and looking into 2024, which is final obligation period, recipients should be taking a pause and understanding where they are. So step one is analyzing the ARPA projects. So we talk about the health and hygiene of the individual projects, looking at expenditures to date, budget to actuals, what the forecast at completion is. That's important to understand the status of what is obligated and what is underway. We also need to understand unobligated projects. If they're large infrastructure projects that are in development, are we going to be able to obligate that project by the obligation deadline and expend the funds by the 2026 expenditure deadline? Thinking about how the recipient is using the revenue loss funds, those have a tremendous amount of flexibility, and can provide alternative uses of ARPA funds for the recipient. So after we've understood where we are on our current projects, the next option would be to look at options for your unallocated funds.

So there's been two recent interim final rule updates. There may be more coming in 2024, but the August and September IFR provided three new eligible use categories if you have unobligated funds, looking at those uses. November provided the clarification around the compliance costs and those uses, so that's another option for unallocated funds. And then making adjustments for projects that were previously obligated and may be off track. The third piece that's important is making sure that you staying up to date on the Treasury guidance, they do a really good job of communicating the updates, summarizing the updates, providing a lot of resources for recipients to compliantly administer their program.

Okay, a quick timeline for summary. So as I mentioned, the November obligation interim final rule was published in the Federal Register on November 20th. So it's open and underway right now in public comment, which will end on December 20th, 2023. The obligation deadline remains unchanged at this point at December 31st, 2024. As I mentioned, the September interim final rule updates for two of the new eligible use categories, the transportation and infrastructure, as well as the Title 1 projects, that expenditure deadline was pulled forward to September 30th, 2026, and then the rest of the eligible uses as the unchanged December 31st, 2026 expenditure deadline. Okay, we have a polling question number four coming up.

Polling Question #4.

Corey Jambon:

Yeah, thank you German. And it's interesting, I pulled the Treasury reporting. As of the Q2 2023 reporting period, of the $300 billion that was allocated, Treasury's reporting that approximately $200 billion has been obligated. So 66% of the funds have been obligated, which is great, and $145 billion approximately, or 48% of the allocation has been expended. So about 50% has been expended and about 65% has been obligated, which is great.

German Perea:

Thank you. I will be now closing the polling question. Please make sure that you have submitted your answer. Back to you Corey.

Corey Jambon:

Okay. Thank you German. So just to close this out, as I mentioned, Treasury has some phenomenal resources available as recipients, I'm sure you're familiar. We listed a couple of the resources that were relevant and pertinent to our updates. And so I appreciate your time this morning or this afternoon, and I'm going to turn it over to my colleague Angie Brown, to talk about Uniform Guidance.

Angie Brown:

Thank you Corey. Good afternoon or good morning to you all who are here. Before we dive into some of the proposed Uniform Guidance revisions, we're going to start off with the polling question. So German?

Polling Question #5.

Angie Brown:

Yeah, there's tons of revisions that I'll be getting into over the next few minutes here. And it's always fun to know who's in the audience in attendance. Some of the questions that may come through could potentially guide some of those conversations.

German Perea:

I'm going to give you guys a few more seconds. Okay, we're almost at 80%. I will now be closing the polling questions. Please make sure that you have submitted your answer. Okay, back to you Angie.

Angie Brown:

All right. It looks like we have a good mix of folks in the audience. And so before I get into the proposed revisions today, which of course be the bulk of my presentation, the objectives that I'll go through, I'll give a little background into two CFR Uniform Guidance and why these revisions are such a big deal. I'll also discuss the timing and the impact of what these will be as well. And of course, the overall objective is for everyone to understand what is being proposed and to take away those highlights.

So, the OMB released pre-publication draft of substantial pending changes to part 200 in September of 2023. This was not something that OMB has done in the past, which was an indication of the magnitude of the proposed revisions being brought forth. We don't usually get a peek into what's being revised and being put out. And so they also provided, which was unusual, a red line version of the document, which we could use to do a side-by-side walkthrough of what the guidance says now, and compare it to what the proposed revision state. And if you're like me, you probably printed out the 400 plus page document and actually looked at those red line changes. And so the official version of the proposed changes were published in the Federal Register on October 5th of 2023. Sadly, if you're viewing this webinar and you haven't submitted your questions, you've just missed the public comment window, which closed on December 4th. Those were due 60 days after the publication into the Federal Register. OMB anticipates publishing the final rule after this comment period closes sometime in early 2024.

So, why were these changes proposed to begin with? The OMB are calling these policy changes and clarifications. That's the language that they're using. And some of the four major goals of the proposed policy changes and clarifications are incorporating statutory requirements and administrative priorities, reducing agency and recipient burden, clarifying sections that recipients or agencies have interpreted in different ways, and to rewrite applicable sections in plain language, improving flow, and addressing inconsistent use of terms. Within this portion of the presentation, I'll really highlight areas that reduce the agency in recipient burden, and we'll also speak to implementing the administrative priorities, which are areas within the revisions that stood out to me. Including plain language, instead of using the term non-federal entity, you'll now see recipient or sub-recipient all throughout the guidance. That's the language that typically most folks in the grants management space use already, but now it's really going to be official that they're going to take the non-federal entity language out of Uniform Guidance and really be consistent with using recipient or sub-recipient.

So, given a little background into the grants landscape, you can see here on this slide that there's been a substantial growth since the inception. And as someone who's been in the grants management space for 20 plus years, I've seen this growth firsthand. Back in 1960, there was approximately $7 billion of federal funding, which was mainly for research activities and land grant institutions. And if you look at the funding now in 2023, we are at approximately $1.1 trillion that has been allocated for federal grant programs. Earlier, Jennifer talked about the broadband program and the billions of dollars that has been allocated. Sarah talked about Solar for All and the billions of dollars that have also been allocated. And then Corey kind of followed it up with talking about the COVID State Local Fiscal Recovery Program, which has an additional $350 billion allocated to it. So the landscape reflects a large growth between 2020 and 2023, again, largely due to COVID pandemic and the funds that received within those three years.

The State and Local Fiscal Recovery Program that Corey discussed earlier, again, it's a $350 billion program. That is bigger than all of the federal granting programs that were implemented in the nineties. So comparing the grant funding to the federal contracting landscape, last year there was approximately $700 billion allocated for contracting opportunities. And one last piece of information related to the totality of the $1.1 trillion in federal grant funds, the US budget itself, including all the federal agencies, the programming, the grants and contracts, is about $5.7 trillion. So this means that the grant funds are greater than 20 plus percent of the budget as allocated.

Again, the dollars of course explain a bit of the importance of Uniform Guidance. The nearly $1.1 trillion is awarded annually with half of that supporting Medicaid funding. There are more than 80,000 recipients and 35,000 recipients who submit single audits, meaning that they have expenditures of more than $750,000. And then overall, there are over 1,800 programs with their own unique statutes and regulations. There are 28 major grant making agencies whom have formally adopted the OMB guidance. There are only two major agencies within the federal government who do not have grant funded programs. All of the other agencies have some sort of grant program, including the White House. So Uniform Guidance to CFR is an instrument that governs the $1.1 trillion, and the 800,000 recipients, and the 1,800 programs, and the 28 grant making agencies, having the same formal documentation to follow.

So within the history of the Uniform Guidance, I'll go into a little history of 2 CFR, and why when there's a change, there tends to be a lot of attention being paid. So the Uniform Guidance is a set of authorized rules and regulations about federal grants located in Title 2 of the Code of Federal Registers. And so I'll say 2 CFR a lot during this presentation. And so that's where that comes from, Title 2. When the original Uniform guidance was created in December 2013, it was a major change as they rolled in eight circulars into one uniform document. If you've been in the grants management space as long as I have, then you remember those separate circulars and how there was one specifically for states and local governments, there was one for nonprofits and universities, there was one for healthcare institutions, and so on and so forth.

And so because of that huge change, federal agencies were given an entire year to adopt and implement the measures. Of course, now that adoption timeline is much more compressed. Per two CFR 200.109, the OMB must review the Uniform Guidance regulations every five years to update and to review for compliance with new laws and regulations, and to also allow for implementation of any administrative priorities for grants. Again, that's something that I'll dive into a little bit in my presentation. In January 2020, OMB proposed revisions and had a comment period. And as a result of the first five-year review on August 13th, 2020, the Federal Office of Management and Budget released its final guidance revised in sections of the Uniform Guidance.

Not on this slide, but in May 2021, not as highly touted as the actual changes to Uniform Guidance, there was a change. Their frequently asked questions document was refreshed that relates to Uniform Guidance as well. So at the end of the day, Uniform Guidance is just that. It is just guidance that's being provided by OMB to those of us in the federal grants management space. So for those 28 grant making agencies, you have to implement the regulation, you have to choose to implement those regulations and follow the guidance being provided.

So for this administration, before the guidance was put into the Federal Register, an announcement was made on the White House website. And so that announcement said that dollars delivering results, the Biden Harris administration publishes proposed updates to the Uniform Guidance to improve the impact of federal grants and other financial assistance. Also included within the announcement was stated federal grants and other financial assistance for research that develops critical medicine, community-based organizations that provide home and community-based services, child care, food, and other resources to vulnerable neighbors, bridges that connect us physically, and broadband that connects us virtually.

Research was one of the first things mentioned in this announcement, followed by those other services and resources which is funded by federal grants. As someone who has a background in research administration and chronic disease management, it was great to see that research is getting the recognition of the important role that it plays in community health in other areas. Also highlighted in the White House announcement from the Biden Harris administration is the proposal will materially decrease the burden on recipients of federal financial assistance, advanced equity, and job growth across the country, and meaningful improve the administration of federal financial assistance. So these revisions tie into the administrative priorities with the goal of reducing administrative burdens.

The reduction of the administrative burdens is always a good thing, especially when you're managing millions of dollars of federal grant funds. As was mentioned, the Uniform Guidance Revisions cover the administrative grant priorities of the current Biden Harris administration in addition to other priorities previously mentioned. Specifically, their priorities as it relates to these revisions are to address related to the COVID pandemic, economy, climate, and equity. So the 2 CFR proposed revisions are influenced from those administrative priorities. With COVID funding, it was really about getting all the grants and getting those funding out of the door as quickly as possible to advance the recovery efforts.

For the economy, within 2 CFR, part 184 was a Build America By America Act, was previously adopted as part of the Biden Harris administration, and finalized in August 2023. Jennifer touched on it a little bit, and Sarah did as well in their presentations. And this preference impacts all infrastructure projects. Within the new updates to the Uniform Guidance, there are no policy or compliance changes being proposed to this part. In February 2023, which was the beginning of the process for the 2 CFR revision changes, and the masses were put on notice when the proposed revisions were published in the Federal Register in August, with the language of having saying that the final update will be done in December 2023, which of course brings us to where we are now. And with that, I'll turn it over to German for another polling question. These changes are continuing to happen, but go ahead German.

Polling Question #6.

Angie Brown:

With these revisions comes a lot of background and work that organizations have to take to ensure that they're staying compliant, that they're staying up to date on the federal guidelines and regulations, and that you know that your staff is notified of these changes, and that the right policies are put into place as well.

German Perea:

We have a few more seconds. I will now be closing the polling questions. Please make sure that you have submitted your answer. Back to you Angie.

Angie Brown:

Thank you German. So, even though I will be speaking primarily regarding Title 2 part 200 of the proposed revisions, you should all know and be aware that there are additional revisions being proposed across multiple parts of the Uniform Guidance that also relates to grants. So if you haven't looked at the revision document or you haven't seen it come across any other webinars or events that you may have been a part of, you will see part one, part 25, part 170, part 175, part 183, part 182, and part 180, in addition to part 200, are going to have revisions being proposed in it. So they're all there. So just be aware that those parts have proposed revisions as well.

So I'll give you the basic layout of the Uniform Guidance, which you should be aware of. There are six Subparts to 2 CFR 200. Now of course, you don't have to know every single part in extreme detail, but kudos to you if you do. You should most definitely know the Subpart that you most closely work with, and then have a working knowledge of the others. So Subpart B is for both the federal agencies and recipients. Sub-part C is for those pre-award processes, and it mostly applies to the federal funding agencies and what they include in the federal award agreements. Sub-part D is for, there's research and grant administrators like myself, and it covers all things post-award for recipients. Sub-part E. It's also important for both federal agencies and recipients as it discusses those allowable costs. And Subpart F, again, it's great guidance, but it's a lot of it is geared toward the auditors.

And then there's of course the appendices, which of course, also important. It covers the notice of funding opportunity languages, but mainly those appendices is guidance for those who are working on an indirect cost rate agreement. All right, so a path to what the plan is and what these revisions look like. So in total, again, six Subparts and the appendix, there are a 191 sections that make up the Uniform Guidance. And within those 191 sections, 69 of them have a proposed change. That's pretty significant with 36% of the guidance is going through a change. That's a real makeover for this particular document.

The most change is being proposed in Subpart C, that pre-award section, with eight of the 17 sections have revisions being included. And also Subpart D, that post-award sections, which 25 of the 47 sections have revisions being proposed. The post-award, that definitely has the most change. So half of Subpart D has revisions proposed. Again, this is a really big deal for the Uniform Guidance and the federal financial assistance landscape. As I stated before, OMB doesn't have to make these revisions to Uniform Guidance. There's no statutory law requiring them to do so. So these revisions are brought on mostly by the administration priorities, which I discussed earlier, and then also from feedback that the federal agencies have been receiving from recipients and sub-recipients on their management of federal grant programs. All right. And that's going to bring us to, I believe, another polling question.

Polling Question #7

Angie Brown:

All right. Thank you again, German. So let's get into these Subparts. Subpart A, there are 10 things that you should be aware of that is being proposed for change. The first one relates to disallowed cost. For some reason, they've decided that the references were no longer needed, and so they are now deleted from this section. Equipment and supplies, proposed. There's a new proposed definition of equipment as tangible personal property with a useful life greater than one year, and acquisition value with an increased threshold from $5,000 to $10,000. It is however, still your organization's capitalization threshold or $10,000, whichever is less. So if this revision goes through for this definition of equipment and supplies, be sure that you update your organization policies to be in compliance with it. This reduces the burden of keeping track of all the equipment, so it's less administrative.

Equipment that's now a supply, so you can recruit indirect costs until it becomes equipment at $10,000 threshold. Also included in this revision, they added a definition of nonprofit, to be sure that agencies can use 2 CFR. Within this section, the modified total direct cost base for subaward values has also increased. The increased eligible value for modified total direct cost, indirect cost base, it's now going from $25,000 to $50,000 per Subaward.

Intangible property, which covers the intellectual property and copyrights, that's also been expanded within the revisions. Participant is a new definition that's been added in. And while participant is already in the Uniform Guidance, the way that it's being defined for 2 CFR is not going to conflict with the already proposed definition that's listed within it. There's also new prior approval guidance in definition being provided. Again, these are going to reduce some of those administrative burdens and allow agencies to waive some prior approval requirements. I'll get into some of those as part of this presentation as well. Special purpose equipment can now directly be charged to a grant, and it now includes associated software as well. Research grants, you'll be able to take advantage of this new addition. They're again, I've already said it, but I'll reiterate that they're replacing the non-federal entity language with recipient and sub-recipient.

And also lastly, you'll see that within the Uniform Guidance, they'll start to exclusively use indirect cost language and not facilities and administrative costs. So that F&A, and so for anyone who's been in the university setting or in a research setting, it's been proposed to use indirect cost, and you'll see that F&A costs are going to start to be phased out of, which is something that's commonly used, it's going to be phased out of use. So not listed on this slide, but important to note that micro-purchase definition is clarified, that the cost will now be based on individual transactions. So the micro-purchase amount is going to be assessed now on a per transaction basis.

So Subpart B and Subpart C. So Subpart B covers that general applicability portions of uniform guidance. And within this section, the applicability table has been removed. So there's no longer a visual within the guidance. It's been replaced with verbiage. So if that's something that you've used in the past, you'll see that that's going to be missing if these revisions pass.

For the exceptions, there's going to be more authority given to agencies, and if they're required by statute of law or they have to use 2 CFR, then no prior approval is going to be needed. While on one side there's more authority given to agencies, the deviation language was added, which is actually a more restrictive language. So it's a little contradictory on that one. And so even though the OMB, I've stated before that they've routinely been reviewing uniform guidance every five years, these revisions has language that's being proposed to remove that timeframe and just have it be reviewed as needed. So they're going to take out that five-year language and just include as needed for a review of uniform guidance.

So there's some mandatory disclosures in 200.113. This was strange language to begin with related to disclosing fraud, fraud as it relates to federal grants. Since it was just saying fraud, there were no parameters around it. So a fraud determination itself can only be made by an enforcement agency. So this language is clarified to be only upon credible evidence you should self-disclose, excuse me. The language also adds civil false claims to the self-disclosing as well. And so this clarifies that reporting will only be triggered by credible evidence of a violation and civil False Claims Act violations are now reportable events. The False Claim Act already includes self-disclosing protocols and practices. So this language just seems to parallel that.

So doing a proper self-investigation is going to be key indicating that there's credible evidence found to disclose. So there's no prize to self-disclose early. So be sure if you find yourself in a position or your client finds themselves in a position that you feel like you need to self-disclose, do your full investigation, self-investigation before you make a rush to disclose.

Also within this section, the language of applicability is also updated to clarify that only for-profit, non-federal entities are subject to Subpart F audits. Again, this proposed language states Subpart F only applies to non-federal entities as defined in the Single Audit Act amendments of 1996. So that definition itself is going to exclude those for-profit entities.

But then Subpart C, these are, again, those pre-award requirements. These are going to apply to the federal agencies and what they include in the award agreements. And some of those notable changes, the fixed award amounts, those have been around since the advent of uniform guidance as has fixed subawards. And so what they propose to do is to take away that cap of $250,000 threshold of the simplified acquisition threshold and propose it to no longer review cost or be required to submit a financial report. Talk about reducing some of that administrative burden.

It's also calling for new language for expenditure- related certifications at the end of the fixed award subaward performance. So the proposed new language it states at the end of a fixed award, the recipient or subrecipient must certify in writing to the federal agency or pass-through entity that the project was completed as agreed to in the federal award and that all expenditures were incurred in accordance with 200.403, which are those allowable costs.

Also, that's not noted on this particular slide is that there's some whistleblower protections that are now being proposed to appear within the text as well. Even though they've always been there in reference, it is now explicitly stated in reference within the subpart.

All right, let's get into Subpart D. Again, this is the hearts of grants management land, and I'll really dive into some of those key changes to Subpart D, which again, it's that post-award section that the federal agencies and the subrecipients and recipients kind of follow. And some of those key post-award proposed changes that I'll cover, they're going to be related to equipment, supplies, subrecipient monitoring, procurement, and closeout.

Again, because this is a major change, I'll say it again, the non-federal entity language is being changed to recipient or subrecipient throughout the uniform guidance. Also clarified is the right to advance payments to subrecipients. And with this proposed clarification, recipients should make those advance payments immediately in advance of cash needs to subrecipients. So unless there's a statutory exception, the uniform guidance are going to apply to those subrecipients via their subrecipient agreement anyway. So this proposed revision is more of a reminder to those pass-through entities. If your subrecipient is in need of cash funds, you don't have to wait until there's a request. You can advance that payment immediately to them.

There's also new language that's going to be clarifying that the federal awarding agency may now approve multiple no-cost extensions. Again, this means that as a grantee, you would have more time to spend down your grant, as multiple no-cost extensions is approved by the funding agencies and would be allowable. I briefly talked about the increased equipment and supplies thresholds. It's going up to $10,000 from $5,000. The expanded intangible property definition also has been expanded and it now adds designated public access repositories, which is a condition that applies when doing research.

There's also a change in the language for intellectual property as it relates to copyrights developed under a federal award to slightly broader language of resulting from a federal award. This makes the protection of intellectual property by segregating from federal-funded work a little bit harder. There's now more ambiguity to protecting your rights to intellectual property developed with federal support.

I feel like there's probably likely more discussions to come as to what qualifies as resulting from a federal award. I imagine that there were probably lots of questions being proposed related to this particular revision. And so there's also a proposed change to eliminate the requirement of using geographic preference. So unless it's prohibited by statute, state, local, or tribal laws, this geographical preferences will be permissible now in procurement activities.

Subrecipient monitoring language was also enhanced to suggest a more robust monitoring is expected, specifically the proposed language states to ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. This trend has been happening for a while with the federal government as it comes to monitoring subrecipients. We already are required to perform risk assessments. We have to initiate subrecipient agreements. Then of course, there's requirements to perform ongoing monitoring for compliance purposes.

So this is likely kind of just the next phase of taking action outside of just on the audit reports. And so there's now explicit expectation to require corrective action on all significant developments. And significant developments itself, it's already defined and corresponds with 200.329(e) within uniform guidance.

Also included, I briefly talked about those prior approval expanded authorities, but particularly for this one, these are expanded authorities in research grants being expanded. The language explicitly adopts consistent with typical agency practice expanded authorities for research grants with respect to those pre-award costs to having implementing a one-time, no-cost extension, and to being able to carry forward those unobligated balances.

So the prior approval is now a way for those three activities for research grants irrespective of the granting agencies. And for the pre-award cost as it relates to these research grant activities, it just doesn't mean how it's being applied to the pandemic funds. These pre-award costs can go all the way back 90 days under the cost principles. So those costs incurred 90 days before the award, if they were necessary to do the grant and you actually got the grant, then you can claim those as pre-award costs. Again, this particular expanded authority only applies to research grants. There are some other prior approvals that apply to everyone that I will touch on those as well.

So there's proposed new language in 200.344 that's stating the recipient must submit a revised final financial report when applicable, indirect cost rates have been finalized. It also proposes new language stating if the indirect cost rate has not been finalized one year at the end of the performance period and would delay closeout, then the federal funding agency is authorized to mutually agree with the recipient to close an award using the current or most recently negotiated rate. However, the recipient is not required to agree to the final rate for the federal agency. So this just, it gives those grantees a little more time to close out those grant awards and to have those costs incurred as well to get reimbursement for those costs.

All right, some additional changes to Subpart D, program income. If you're not aware, that program income, that language was already pretty vague within uniform guidance. And the program income is income generated from grant-supported activities or is earned as a result of an award. And so you've received federal money was received and is used to pay those operating costs of the institutional organization. And that activity, it generates income, which it wouldn't have done without the grant.

So the federal government has rules on what you can do with that money, which they help generate. So there's clarification language on the additive method for program income, meaning the program income that you've now generated is added to the original grant-funded part that basically make one bigger grant. And this additive method language now implies and clarifies you have to spend program income on allowable cost. The broader language said that you could spend program income to further program purposes. While this is only a slight difference, they are essentially tightening up the language that says allowable costs and to use that program income for those purposes.

So other language related to program income, it's related to program income and fixed amount awards that you are now able to generate and use program income in accordance with terms and conditions of your grant award. So now generating program income rules don't apply. I'm not sure how a fixed award can generate program income, but if it does, there's now some flexibility on how you can utilize those funds.

Some reducing the administrative burden was one of the key objectives of these proposed changes. And so there are a few areas where this is really evident. And one of those is reducing the requirement of needing prior approval of switching subrecipients. So if you want to change subrecipients in the middle of an award, now you're able to do so with this proposed revision.

I find this really interesting that there has always been a requirement to get the federal funding agency approval on the front end of subcontractors and subrecipients, and now this new language allows for recipients to change subrecipients midstream. Again, I think this is one of those revisions where there's likely lots of comments that have been proposed for those agencies to review prior to this being implemented.

Again, I've discussed the increase of equipment and supplies to $10,000. And so the proposed revisions within 200.313, it now gives more recognition to Indian tribes as they may now use their own policies for use, management, and disposition of equipment. This equally is given them the same rights that states and local governments have always had and allowing for more flexibility of property management for those tribal governments.

Part 200.313, it also increased the disposition threshold of equipment matching that threshold value and change. So if there's equipment purchased with federal dollars or match that's now valued at $10,000 or less, a grantee may dispose without any other obligations. And so the same position for unused supplies was also increased to the same level as that of the equipment increase. So this one just matches up the language for equipment and supplies.

As with property rules, there's explicit recognition in the rules for tribal governments now. The proposed revisions within 200.317, it grants, again, tribal governments to use their own procurement policies, again allowing for more flexibility in procurement for tribal governments.

Also, with procurement proposed changes, there's qualifications-based procurements will no longer be required to negotiate profit separately from price. This may add a little more risk to those qualifications-based procurements. And those are things like your engineering services or your architectural services. Again, another section that I feel like likely generated some comments from the public back to the OMB on how these are going to be handled.

In 2020, termination flexibility for the federal government was given to agencies and that language was if your project no longer added up to the goals of the agency, they could terminate you. So there's some language that is now a little more flexible.

The new language added is relatively huge for the grantees, as a language added specific calls for agencies to have written procedures for processing obligations, hearings, and appeals. The prior language was passive and simply suggested that if the agency had procedures, they had to be made available. And so this revision is likely a significant impact on tribal governments and non-profit entities as they're less likely to have these procedures as part of their subrecipient management processes. And again, you can now charge administrative cost incurred within the 120-day closeout period for... You can charge it to the final period of performance.

So Subpart E, there's lots of changes that were in this section as well, but I'll only talk about a few of those, the ones that stood out to me. The first one, they removed 10 items that were previously required for prior approval from the federal awarding agency before implementing changes. The third one that I thought was interesting is that they reiterated the use of using a federally negotiated rate. This speaks to those situations where the OMB really wants organizations to have the ability to use their own rate, even if it is higher than what another organization would like.

And the third thing that sticks out to me is in reference to the indirect cost rate agreements. These increase the minimum rate from 10% up to 15%. And so this is going to provide a little more fairness to grantees and subrecipients, especially those smaller institutions and for those institutions who have not negotiated a federally indirect cost rate agreement. This allows for additional funds to be used for administrative purposes. It also makes it a little more administrative friendly for recouping administrative cost.

Again, I shared there were 10 prior approval requirements proposed that are deleted from this list. And what stands out from this that it should be of note for the audience, no longer having to reprove prior approval as it relates to real property, equipment, and participant costs. Again, these all reduce some of those administrative burdens at the recipient level.

Subpart F, you know this raises the single audit threshold to $1 million from 750 thousand for those smaller nonprofit and organizations. This means you no longer have to perform a single audit. And for those that monitor these types of organizations, you'll have one less organization to monitor.

For the appendices, the NOFO is going to undergo an overhaul. It's going to have a new format, plus some equity language is going to be added. I previously talked about the modified total direct costs increasing. And then there's some future considerations that are going to be proposed. It says future, so that can be in any future that the federal government decides when that will be.

I know that was a lot to digest, and again, this webinar comes after the comment window has closed, but OMB anticipates publishing the final update sometime this month, and so you can look for it then. And we can all tentatively expect the final version of these revisions to be published in March 2024, and any awards received after March 2024, you'll start to utilize the guidance moving forward.

There's one more poll question, and then I will hand us back, back over to Jennifer to wrap us up. And so thank you all for your time and attention. And I'll hand this over to German for the poll question.

Polling Question #8

Jennifer Butler:

Great, thanks so much. Thank you so much, Angie. I'm happy to hear that Angie's presentation was helpful to so many of you. We're going to finish up here right on time. And so I'm going to take a couple of minutes just to talk about some key takeaways. I'm going to tell you a little bit more about EisnerAmper and what we can do. Hang on until the end because we've got our contact information on the slide. And then if we have some time, we'll address some questions.

So just really quickly, some key takeaways on navigating federal grants. So we did a recap of this year. So this year included a lot of different changes, a lot of programmatic changes, new federal programs. And so some of our key takeaways are really you have to have a comprehensive understanding of grants. So there's a lot of programs out there. There's a lot of different knowledge.

Usually, Angie and I both are long-time grant folks, and there's not very many grant unicorns out there. We rely on each other. We rely on colleagues within our grant community and across a lot of different disciplines. And so just make sure that you've got diversity of skillset when you're managing some of these federal programs.

The second one is on the community impact. So these federal programs are intended to serve in communities and align initiatives with community impacts. Make sure that you're really following all these different regulatory changes. So Angie spent nearly an hour covering the 2023 interim final rule. That was probably 20 or 30 hours worth of her digesting those 400 pages for her to come to you with a summarized version of that. So not only is it just uniform guidance, there's changes to all different aspects. Our accountants and auditors are keeping up with these changes as well as those of us that help our state and local and tribal governments perform and implement their programs.

Think really about the strategic considerations for your government. So whether you're serving a governmental entity or you are part of a governmental entity, you've got a lot on your plate, and the effective management of those grants is really going to help your communities and your constituents.

And then number five, which is kind of the overarching theme of this, is just understanding overall the grants landscape, how the proposed revisions are going to impact you. So there's a lot of pieces and parts to that and you're really going to have to look at your own policies and procedures on your programs, at your entities. If you're a nonprofit, a school, a hospital, anyone who receives federal funds is going to have to be making changes coming up.

Just a little bit about our firm at the very end here. So we work all across governmental entities. We serve state agencies here in Louisiana where I'm based. We serve parishes, counties, other local governments, for-profit entities, not-for-profits, hospitals. Our team, many of whom you've heard from, are really steeped in grants management, financial management, and funds disbursement on these large programs. We can help you do program management.

And then here's just a really quick list of experience with some of the current federal funding, all of these different ARPA projects. Of course, we talked about B, the Solar for All program that's coming up. Jason Coker with school-based Medicaid. So lots of different kinds of experiences that we have. And I will actually skip to our contact information so that you guys have that up on the slide. We definitely appreciate everybody's attention. I know that Corey had a specific question that he was going to address, so we'll go ahead and take that one out and see if we have time for any other questions. So Corey, take it away.

Corey Jambon:

Yeah. Thank you, Jennifer. So we received a question about whether or not the ARPA State and Local Fiscal Recovery Fund window was open for organizations to apply. And so I'll start with the allocations were sent to states and then two tiers of local governments. So those allocations have already been made. If you are an organization that serves a community, I would encourage you to reach out to your local government or your state about services that you can provide because they still have the ability to obligate funds until December 31, 2024.

Jennifer Butler:

Great. Thank you so much, Corey. And we really appreciate everyone's time and attention. I know we didn't get to all of the questions. Please feel free to take down our contact information here, reach out to us. If you have specific questions, we're happy to take those offline. Again, thank you so much on behalf of the EisnerAmper team and our governmental team. We really appreciate the opportunity for you guys to hear from us and we look forward to hearing from you in the future.

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