Area Plan Fiscal Connections

1. Area Plan Fiscal Connections Budgets/Closeouts Reconciliations Expenditures Advances What’s New Laws, Regs, Policy Presenter: Vern Foster, Aging Programs Analyst II California Department of Aging Vern.Foster @ aging.ca.gov (916) 928-2746

2. Our Road Map Our adventure includes stops at… • The Fiscal Compliance Café (Ooooooooh…) • Budgets/Closeouts • Reconciliations • Monthly Expenditures • Advances • The Newsroom (Ahhhhhhhhhh…) • What’s new at CDA • The Fiscal Library (How Interesting…) • Applicable Laws, Regs, Policies for CDA’s programs

3. Due DatesBudget and Closeout Reporting • 45CFR requires Accurate, Complete, Current disclosure of financially assisted activities • Budget Cycles • May 1 – Original Budget • December – Budget Revision 1 (includes OTO) • April 30 – Final Budget Revision (reconcile and align with actuals) • Last opportunity to adjust budget, and Request Transfers • Closeouts – August 30 • tight deadline in order to complete closeouts prior to end of Federal Fiscal Year (Sept 30th) • Reallocate Unspent Allocations as OTO (Bud Rev 1) • Must align with Budgeted costs (more on this later)

4. Due Dates continued…Monthly Fiscal Reporting • Due the 30th of each month, submitted in CARS • Request For Funds (RFF) for future month (30 days ahead) • Financial Status Expenditure Report for prior month (30 days prior) • October RFF due Aug 30 • July Expenditures due August 30 • Initial Advances (beginning with July RFF) will be held until: • State Budget is enacted • Contract is executed and • AAA Budget is approved

5. Monthly Fiscal Reporting • Monthly Advances (RFF) – California Aging Reporting Systems (CARS) • 45CFR Financial Management Standards require AAA’s be paid in advance • Advances shall be limited to the minimum amounts needed, for immediate cash requirements of the recipient organization • Executed Contract and Approved Budget in place? • Use Original Budget Display amounts when calculating 1stcouple months • New Process – Interim Transfers Budget Display will be issued and posted to CARS, moving the funds as requested in the Original Budget • No Executed Contract? Transfers will not be loaded into CARS • Federal - 1st 3 Months (1/12th maximum) • Must submit a RFF for each month • Must be based on projected actual costs • If no expenditures will be incurred in July or August – send Zero (0) Request • Admin and Program requests are combined for each Fund Source • State – You may request your State Funds during first three months • No Monthly Limit (however, expenses must justify Request amount) • Report State expenses first, as advanced • Benefit - Fully Advance and Expend the funding, no more reconciling State

6. Monthly Fiscal Reporting • Monthly Expenditure Reporting California Aging Reporting Systems (CARS) • Report Actuals, not Estimates • Report all activities and funding used to meet the costs • Report Program Income monthly • Report Available Match monthly • Unreported amounts cause federal share to be overstated • CDA Expenditure Adjustments/Corrections • Adjust AAA records to reflect identified monthly adjustments • See Expenditure Reconciliations sheets (mailed monthly) • Ensure AAA and CDA records align each month • Take corrective action based on identified adjustments • Report whatever costs you have on the books as of the due date. • Don’t delay submission waiting for Provider invoices • Do not hold reports, do not submit multiple months • Untimely reports skew CDA’s federal projections • Inaccurate federal projections affect Cash Flow which will ultimately affect AAA’s • Reconcile AAA fiscal reports monthly before submitting expenditures • Eliminates major adjustments after year end • Report timely, accurately, by the due date Compare Budget to Y-T-D Actuals before reporting • Examples of problem areas: • IIID Other (Health Promotion & Disease Prevention) • Over-reporting Admin • Nutrition Counseling vs Nutrition Education • Reporting costs in service categories that aren’t budgeted

7. CARS Budget to Expenditure Reconciliation • CDA uses CARS Reconciliation data to: • Monitor funding sources, to ensure costs do not exceed allocations (IIIB, IIIC-1, IIIC-2, IIID, IIIE, VII) • Monitor Budgeted amounts against YTD Expended amounts • AAA’s have 10 % discretion within each funding source • Notify AAA when they have exceeded the 10% • Identify costs that have not been budgeted • Make identifiable adjustments, as needed

8. What about this 10% Dicretionary leeway? • 45CFR states “AAA’s shall submit a budget revision for category or line item changes which exceed 10% • CDA Standard Agreement states “AAA’s shall be compensated only as itemized in the approved budget”, with the following exception. • AAA’s have a 10% discretion between service categories and/or budgeted line items within a funding source. • 10% movement between IIIB funded services • 10% movement between IIIC1 funded services • 10% movement between IIIC2 funded services • 10% movement between IIID funded services • 10% movement between IIIE funded services • Transfers between funding sources require budget revision • BUDGET vs CLOSEOUT • If you exceed the service category budgeted amounts by more than 10 % CDA may disallow those costs that exceed.

9. CARSBudget to Expenditure Reconciliation Review Available Balances Service Categories 10% Discretion between Service Categories 10% of Total IIIB Budget 137,194

10. CARS - Request for Funds (RFF) • 1st three months – up to 1/12th • Based on estimated need • Beginning with the October Advance, RFF is approved based on the lesser of Balance Available or Maximum Approvable • Balance Available = Allocation – Prior Advances (RFF) • You cannot exceed your contract allocation • “Maximum Approvable” RFF amount is a behind the scene calculation, accounting for YTD prior advances, YTD reported expenditures, and projects (2) months (using a calculated average month) • Maximum Approvable = Allows AAA to keep 1.5 months, (150%) of an average month’s expenditure as “Cash On Hand”. (See Example) • 1.5 months calculation (Maximum Allowable Cash On Hand) – Unspent Advances = Maximum Approvable

11. CARSAdvanceto Expenditure Reconciliation

13. What’s New with Fiscal? • More Fiscal Accountability • Fiscal Team will be returning questionable expenditure postings • Costs posted to services that are not budgeted • Fiscal Team will be returning questionable advance requests • Funds requested are in excess of Maximum Approvable • Expenditures may be understated • Advances may be overstated • Expenditure and Advance records may not be reconciled • Funds requested are less than projected expenditures • Expenditure and Advance records may not be reconciled • Expenditures may be overstated

14. What’s New with Fiscal? Continued… • Tightening of Expenditure/Contract spending • More Federal scrutiny of all of our fiscal processes, particularly Expenditure and Advance processes • Over-Advancing (in excess of actual need) • Underspending (Grants not fully expended) • More Fiscal Accountability • Fiscal Team will be returning questionable expenditure postings and advance requests • Under/Over budgeted amounts • Under/Over advance • Tightening of Monthly reporting • Timely reporting - monthly • No more submitting 2-3 months at a time • Late and sporadic AAA monthly reporting causes inaccurate projections at the Statewide level

15. What’s New with Fiscal? Continued… • Contract Under-performing… a AAA Fiscal Responsibility FISCAL OFFICER will: • Ensure contract funds are fully expended • Work with Administration and Program staff monthly • Monitor AAA Direct and Provider Contract • Expect closer monitoring by CDA Program and Fiscal staff • AAA’s will notice an increase in calls from CDA staff • AAA’s that appear behind in their spending will be asked to provide a plan for expending all funds

16. Why? In the current fiscal climate: • Funding is Tight! Every government entity is under increased scrutiny and accountability for funds. • Federal Audit findings related to late paying out of funds • State Controller is scrutinizing payment processes • Unreconciled Advance Requests - Inability to make accurate Expenditure and Cash projections • Every year we that we show unspent funds we are showing that we don’t have a need for the funding, therefore we risk losing Federal Funds • Potential loss of federal baseline dollars • Potential loss of OTO

17. More …What’s New with Fiscal? Continued… • Interim Transfer Process • Original Budget transfer requests will be posted to an Interim Budget Display in order to officially move the transferred funds • Fund transfers will be officially posted and available for use in September, rather than waiting for Amendment 1 in November/December • Interim Budget Display will be posted to CDA’s website, using the new “ AAA Budget Displays” tab • Fiscal Officers and Directors will be notified of posting via email • AAA’s may begin requesting Advance funds in the revised funding categories • AAA’s that have not submitted fully executable contracts will not see their original budget transfers posted until both Original and Amendment 1 contracts have been fully executed

18. And More…What’s New with Fiscal? Continued… • CDA Contract Funded Property Reporting • $500 Limit has been established • PM forthcoming… • AAA’s must track equipment with a cost of $500 or more • New CDA 32 (Property Form) • New CDA 248 (Request to Dispose Form) • New CDA 248 Process to involve CDA Program and Fiscal staff

19. And More…What’s New with Fiscal? Continued… • Audit Determinations recoupment • CDA will no longer roll disallowed costs forward to the current year. • Disallowed costs will be invoiced and must be repaid to CDA, using local funds, to be remitted to the Federal government • State Controller determined that these funs must be remitted to the federal government • Unearned Funds recoupment • CDA will no longer rollunspent Cash Advance funds forward to the current year as an Advance. • Unearned Cash identified in the Closeout will be invoiced, and must be repaid to CDA.

20. And Finally… What’s New with Audits? Audit Findings – Provider Match CDA Audits has found that many AAA’s have not been testing Provider Match • Provider Match must be tested by AAA. • Immediately begin testing provider match • Can lead to disallowed costs if match is not verified • Use risk-based approach to determine amount of testing samples • If audit of Match has never been performed – test 100% to establish risk • CDA Audits will begin verifying and disallowing costs associated with untested provider match • Contact CDA Audits for more information

21. What Requirements Drive What We Do? • Older Americans Act - 2006 (OAA) • Title III – Grants for State and Community Programs on Aging • Title VII – Allotments for Vulnerable Elder Rights Protection Activities • Section 304 – Admin Allotments and Federal Share (Match language) • Administration - Not more than 10% of a State’s federal allotment shall be available for paying the costs of area plan administration • Admin Match - Of that 10%, Not more than 75% shall be available for paying the cost of administration of area plans • Restated - Admin Match = 25% • Program- Of the remainder of a State’s federal allotment, not more than 85% shall be used for the cost of supportive services, senior centers, and nutrition services • Equals 15% Overall Program Match for IIIB, IIIC and IIID • Section 309 – Of the amounts required to meet the non-federal share (Match), amounts exceeding 10% shall be from State sources • Restated – AAA Program Match = 10% • Restated - State Program Match = 5% • 25 % of the non-federal share (Match) shall be met by local public sources • Restated – 25% of all AAA Match must come from public sources

22. Applicable Laws, Regs, Policy • Older Americans Act -2006 (OAA) • Older Californians Act (OCA) • Code of Federal Regulations (CFR) • Grants Management • Cost Principles • California Code of Regulations (CCR), Title 22 • CDA Program Specific Regulations • CDA Standard Agreement • Contract Terms and Conditions • DPA Rules for Personnel and Travel • Program Memos (Policy) • Data Dictionary – Service Unit Definitions More later…

23. Older Americans Act - 2006 (OAA) continued • Section 306, 307 – Requires the Area Plan to identify an Adequate Proportion of IIIB allotment to be spent on services associated with: • Access to Services – Transportation (to include health and mental health services), Outreach, I & A and Case Management • In-Home Services – to include supportive services for families of Alzheimer’s disease and related disorders • Legal Assistance CDA monitors to ensure AAA’s have met their approved Adequate Proportion of these priority services. • Section 308 – Transfers • Allows transfers of not more than 40% between IIIC-1 and IIIC-2 • Allows transfers of not more than 30% between IIIB amd IIIC • Administration on Aging PROGRAM INSTRUCTION states there is no authority for states to transfer in or out of IIID or IIIE

24. What Requirements Drive What We Do? Continued… • Older Californians Act -1997 (OCA) • Established State’s commitment to it’s older population • State funding removed from Governor’s Budget - 2009 • CBSP Program funding eliminated • Law remains in effect • Only Health Insurance Counseling and Advocacy Program (HICAP) funding remains

25. What Requirements Drive What We Do? Continued… • Code of Federal Regulations (CFR) Grants Management • 45CFR74– Non-Profits, Hospitals, Institutions of Higher Education • 45CFR92– State and Local Governments Primary areas covered • Standards for financial management systems • Payment – Advances required • Period of availability of funds • Allowable Match rules • Program Income (Grant Related Income) • Budget Changes (Revisions) • Procurement

26. Codeof Federal Regulations (CFR) Continued… Cost Principles – Allowable Costs • 2CFR220 - Institutions of Higher Education (OMB A-21) • 2CFR225 - State and Local Governments (OMB A-87) • 2CFR230 - Non-Profits (OMB A-122) Primary areas covered • Appendix A – General Principles • Factors affecting allowability • Reasonableness • Allocable Costs • Appendix B - Selected Items of Cost (Costs Listing)

27. Code of Federal Regulations (CFR) Continued… General Requirements - Requirements State agencies shall meet to receive grants to develop comprehensive and coordinated systems for the delivery of supportive and nutrition services under Title III (OAA) • 45CFR1321 • State Agency Responsibility • AAA Responsibility Some Specific Fiscal Related Areas Covered • Definitions of Frail and In-Home Services • Means Testing – prohibited • Opportunity to Voluntarily Contribute • Area Plans must be submitted annually • AAA will not fund Program Development (PD) or Coordination (C) activities with IIIB dollars unless it has spent it’s Administration allotment • PD and/or C activities must be submitted for general public review and comment

28. What Requirements Drive What We Do? Continued… • California Code of Regulations (CCR), Title 22, Division 1.8, Chapter 3 – Title III Programs • California Dept. of Aging Program Specific Regulations • Designation of PSA’s and AAA’s • AAA General Responsibilities • Area Plan Contents • Requires Goals for each Program Development and Coordination activity • Allocation, Use and Transfer of Funds • Unexpended Title III & VII funds reallocation (OTO) • Equipment • Home & Community Based Projects • Innovative Pilot Projects • Baseline Services • Minimum Budget Requirements • Direct Service Approval Requirements

29. What Requirements Drive What We Do? Continued… • CDA Standard Agreement • Contract Terms and Conditions • DPA Rules for Personnel and Travel • Departmental Program Memos (Policy) • New Departmental Policies • New AAA Requirements • Data Dictionary • Service Category Definitions • Service Unit Definitions

30. Thank You All For Coming!