On-Line Financial Management Workshops Equipment Facilities Capital Improvements

On-Line Financial Management Workshops Equipment, Facilities, Capital Improvements & SWA Real Property June 2009 1

Financial Management Workshop Equipment, Facilities, Capital Improvements & SWA Real Property 2

Financial Management Workshop Equipment 3

Equipment – Federal Definition § § § Unit acquisition cost of $5000 or more Useful life of 1 year or more Prior approval requirements Title remains with grantee Grantee can define equipment at a lower $ threshold 4

Prior Approval of Equipment Purchases § Formula grants: States have been delegated approval authority for equipment § Discretionary grants: approval rests with the ETA Grant Officer 5

Allowable Equipment Costs § Direct cost to grant if prior approval is obtained § Purchased by the grantee – Users charged a share of depreciation, or – Use allowance fee charged to all users • Federal cost recovery limited to 6 2/3 percent of total acquisition cost annually 6

Management , Use & Disposition § States follow State laws and procedures § All others follow federally specified requirements 7

Equipment Management § § § Required of all grantees Biennial physical inventory must be done Maintenance procedures Loss prevention & control system Disposition process Tagging 8

Does your organization have …? § Policy guidelines for retrieving equipment § Sufficient safeguards in high traffic areas § Procedures to track down misplaced items § A system which can identify the location of items at any given moment 9

Equipment Records must contain the following: § § § § § 1. Unit acquisition cost 2. Acquisition date 3. Description 4. Serial Identifying number(s) 5. Funding source 6. Percentage of Federal interest 7. Title of ownership 8 -9. Current use & location 10 -11. Date and condition at last physical inventory 12. Disposition data 10

Period of Use for Equipment § Project/Activity period • Even after Federal grant funding ceases • If needed less than full time – Non-interfering use for other Federal programs allowed – reasonable use fee = program income • As long as project/activity continues, then § Other Federally funded activities • Until no longer needed for Federal programs 11

Order of precedence? For post-project use § Other Federal grant program • From awarding agency [ETA] » Nature of program need not be same/similar • From same Federal agency [DOL] • From other Federal agency 12

Equipment Disposition § Equipment items with FMV = $5, 000 – May retain for other uses • Must reimburse Federal agency » Current fair market value – If no other use for item • Request Disposition Instructions 13

Equipment Disposition Request § Purpose is to allow awarding agency • To determine if it has another use for items • If so, instructions will be where to ship § Most often will not get response » Many recipients fail to ask – If no response in 120 days – Only three options » Sell, Keep or Donate [give away] – Must reimburse Federal agency » Current fair market value » Sales proceeds less costs of selling 14

Other Property Issues Disposition of Supplies § No disposition request required for supplies • Award recipient responsibility § May retain or sell residual inventory § When residual inventory = $5, 000 FMV • Aggregate fair market value of all remaining supplies • laptops + paper + pencils + staples + desks + chairs • Return sales proceeds or fmv to funding agency 15

Facilities 16

Allowable Premises Cost § Costs of Ownership – Depreciation or Use Allowance – Plus annualized 3 rd party Interest § Capital leases – Lease with option to buy – Same as costs of owned building § Operational leases – Commercial rate 17

Reasonable Rent § Reasonable rental cost for buildings § Sale or leaseback arrangements § Less-than-arms length 18

WIA Prohibition § Construction or purchase of facilities – (20 CFR Part 667. 260) § Exceptions: • Physical and programmatic accessibility and reasonable accommodation (rehab act and ADA) • Repairs, renovations, alterations and capital improvements of property including: – – SESA JTPA transferred property Job corps facilities and Disaster relief 19

Capital Improvement Projects Examples § Materially increases the value or useful life of the facility – Replacing a roof – Paving sidewalks – Adding a floor – ADA upgrades to toilets – HVAC system 20

DOL Capital Improvement Projects Prior Approval Process (Charges to the Grant) § OMB Cost Principle Circulars require prior approval from awarding agency – WIA formula grants – authority delegated to the governor – All other grants – N. O. approval required 21

Capital Improvements All Programs § Tenant improvements - part of the lease agreements – see TEGL 7 -04, page 14, number 14 for DOL guidance § Tenant improvements not included in lease agreement 22

Program Income § SWA-owned building – Program income must be used for WIA, Wagner Peyser or UI Programs § Other programs 23

Cost Free Occupancy (Any ETA Program) § DOL programs cannot pay a disproportionate share of facilities costs § There is NO free rent for partners … – RSA should contain information on shared space costs 24

Operations & Maintenance Costs Examples § § Utilities Security Grounds Janitorial 25

Payments or Equity Exceed Occupancy § WIA, JS or UI equity or DOL lease payments are greater than program occupancy – Actions must be taken to eliminate the space • These actions need to be documented – Breaking lease agreements – WIA, JS, UI equity disposition will be prescribed by the Secretary 26

Idle Space/Facilities & Unneeded Space § Idle Space/Facilities - space once needed, but no longer needed (allowable) § Unneeded Space – acquired too much space, never needed, never used (unallowable) § Space Plans 27

Organizational Assessment – Idle Space/Idle Facilities/Unneeded Space § Books of account – examine charges versus program usage (occupancy) § Perform physical walk through of facilities at grantee and subgrantee levels 28

State Workforce Agency (SWA) Property 29

SWA Property § Old Section 193 of WIA – use of buildings: Allowed SWA buildings with federal equity to be used for One-Stop purposes 30

SWA Property – New Section 193 of WIA, Effective February 14, 2007 § 2007 Revised Continuing Appropriations Bill – Gave States the federal equity in SWA buildings – Ends the practice of using W-P & UI grant funds to amortize the costs of acquiring such buildings – No longer authorizes the use of the SWA buildings for One-Stop purposes § TEGL 3 -07 was issued to provide guidance on the changed requirements 31

Ban on Amortizations Circulars and 2007 Appropriations § All Revised OMB Cost Principles Circulars, May 10, 2004 § Revised WIA Section 193 Paragraph (b) – Limitation on use – A state shall not use funds awarded under this Act, the Wagner-Peyser Act or Title III of the Social Security Act to amortize the costs of real property that is purchased by any State on or after the date of enactment … 32

SWA Buildings – Continued Use § Item 5 of TEGL 3 -07 § Allows W-P & UI amortized part of buildings to be used for WIA, UI & W-P activities § Limits the use of any part of buildings with Reed Act equity to UI & W-P administration 33

State’s New Equity Property Disposition Options § Item 6 of TEGL 3 -07 § When SWA building no longer needed – Sell or Retain for other State purposes § If sold, sales proceeds are to be used for WIA, W-P and UI program activities 34

State’s New Equity Property Retained § Item 6 of TEGL 3 -07 § If retained, must have appraisal to establish the current FMV § Cash equivalent of FMV is to be used for WIA, W-P and UI program activities 35

Disposition Proceeds § Item 6 of TEGL 3 -07 § Deposit in interest earning account – Sales proceeds and/or – Cash equivalent of FMV § Interest or other earnings are also to be used for WIA, W-P & UI programs § Report on line 11. b. of ETA-9130 36

Reed Act Equity in Property Dispositions § Item 6 of TEGL 3 -07 § Reed Act equity share in any SWA buildings dispositions must be returned to State’s account in the Unemployment Trust Fund per UIPL 39 -97 37

Review Questions 38

Question #1 § Question 1. An agency may define equipment at a lower dollar threshold than the federal requirement in order to track computer laptops given out to all of its case managers. TRUE or FALSE ? 39

Question #1: Answer § Answer 1. TRUE: Policies and procedures instituted by a local or state agency may be more restrictive than federal requirements as long as the policies are consistent. 40

Question #2 § Question 2. Installation of a wheelchair ramp is not an allowable expense: TRUE or FALSE ? 41

Question #2: Answer § Answer 2. FALSE: Repairs or renovation costs to meet ADA requirements are allowable. 42

Questions? If you have questions, please contact your Federal Project Officer 43