Document Sample
					       Formula Grants

Formula grants are Federally
appropriated dollars which are allocated
annually to the 50 States and Insular
Areas for the purpose of continuing
agricultural research and extension
    Formula Fund Programs

   Research (1862 and 1890 LGIs)

      Hatch  Act of 1887
      McIntire-Stennis Act of 1962
      Evans-Allen (Section 1445 of the National
       Agriculture Research, Extension, and Teaching
       Policy Act of 1977 - NARETPA)
      Animal Health & Disease Research
      (Section 1433 – NARETPA,1977)
     Formula Fund Programs

   Extension (1862 and 1890 LGIs)
     Smith-Lever Act of 1914
     Section 1444 of NARETPA, 1977
     Renewable Resource Extension Act of 1978

   Education (1994 LGIs)
     Equity in Educational Land-Grant
      Status Act of 1994 Program
            Hatch Act Funds

   Recipients:

    State Agricultural Experiment Stations in 50
    States, DC, Guam, Puerto Rico, the Virgin
    Islands, Micronesia, American Samoa, and
    Northern Marianas Islands
          Hatch Act Funds

   Matching:
     100% for 1862 LGIs on Hatch Regular and
      Multi-state Research funds

     Insular 1862s must match 50% of their FY
      2002 allocation, and thereafter. Matching
      waivers may be requested.
Hatch Act Funds

   Carryover:

       100% may be carried over for one full year.

     Funds   must be expended by the end of the
        second year.
   Factors Considered:

       Reasonable

       Allocable

       Applied Consistently

       Limited by regulations-OMB Circular A-21 (Cost
        Principles for Educational Institutions) and
        Administrative Manual for the Hatch (Experiment
        Station) Act as amended.
   Recognized as necessary

   Meets the terms and conditions of the Federal
    statute and Plan of Work/agreement

   Market prices for comparable goods/services

   Acted with due prudence in responsibility

   Consistent with the institution’s policy

    It was purchased solely to benefit the project or program
        If it benefits more than one project, costs must be allocated on any
         reasonable basis (adopted by the institution) which is applied

    Costs may not be shifted from one project to another to cover budget
     shortfalls or overruns

    Costs allocable to industry or foreign governments may not be shifted to
     Federal awards

    Internal Controls-no “one” person has control over all aspects of a

   Reasonable method adopted by institution

   Documented

   Applicable Federal Statute

   Agency Administrative Guidance

   Cost principles in OMB Circular A-21,
    A-87, A-110

   Code of Federal Regulations (Title VII)

   Accountability shall be based on the total annual
    Hatch program conducted by each station, rather
    than on individual projects.

   Examinations in the form of audits or internal audits
    are required to occur not less than every two years.
    Generally, examinations conducted on a university
    wide basis to test the fiscal integrity of financial
    transactions, as well as compliance with the terms
    and conditions of Federal grants and other
    agreements will meet the requirements of the Act.
   Entertainment costs
   Fines or penalties
   Goods and services for personal use
   Housing and personal living expenses
   Indirect costs/overhead
   Insurance against defects
   Legal expenses
   Lobbying
   Advertising and public relations costs
       Except: hiring staff, procurement, disposal; etc.
   Airfare costs (excessive amounts)
   Alcoholic beverages
   Alumni activities
   Bad debts
   Commencement costs
   Contingency provisions
   Donations and contributions
   Memberships in civic, social, or community organizations

   Recruitment costs (excessive)

   Salaries related to classroom instruction

   Selling and marketing expenses

   Student activity costs

   Tuition

   Volunteer services

   Any other costs deemed unallowable by statute, regulation, or

   Costs must be reasonable, allocable, and allowable

   Internal controls (no “one” person has control over
    all financial aspects of a transaction)

   Reasonable method of allocation

   Must meet the requirements of A-110, Grants and
    Agreements with Institutions of Higher Education, Hospitals,
    and Other Non-profit Organizations
   All records pertinent to an award must be
    retained for 3 years from the date of
    submission of the Final SF-269, Financial
    Status Report

       Financial records
       Supporting documents
       Statistical records
       All other pertinent records

   Unless litigation, an audit, or other claim is
    initiated prior to the termination of the 3 year
    period. (Keep until resolved.)

   Records for real property & equipment must be
    retained for 3 years after final disposition
   Contributions may be included when the following are met:

        Verifiable in the records
        Not included as contributions for other Federal
        Necessary and reasonable for the project
        Allowable under the Cost Principles
        Non-Federal funds (donations)
        Are in the approved budget
        Conform to other provisions of OMB Circulars
Matching requirements

 The Hatch program is exempt from the
 indirect cost provision of OMB Circular A-21.

 Accordingly, indirect costs are not allowable
 as contributions in satisfying the matching

   Research Formula funds: Approval delegated
    to Research Director/A-TR for both domestic
    and foreign travel.

   Costs included

       Activities directly related to the project
       Writing reports or articles
       Participating in seminars and meetings
       Consultations

   Costs for salaries and fringe benefits are
    determined by time and effort reporting.
   Contributions to LGI retirement systems is
    limited to 5% of the salaries paid from
    formula funds

   Health Insurance program

   Unemployment Compensation

   Workman’s Compensation

   Equipment purchases of $5,000 or over,
    should be capitalized for all formula
   New construction or renovations – not
    allowed with extension funding

   Use the depreciation method normally used
    by UC for the asset type

   When replacing a vehicle, one vehicle may be used as a trade-in
    to offset the cost of a new vehicle purchased with formula funds

   When vehicles or equipment ($5,000 value and more) are no
    longer needed for the project, LGI may retain provided Federal
    awarding agency or it’s successor is compensated (7CFR 3019.34)

   Equipment with a unit acquisition cost of less than $1,000, may
    be sold or retained with no further obligation to the Federal
    government (7 CFR 3015.168)

   Otherwise, contact CSREES for disposition instructions
    Program Income
   Royalties from copyrights or patents resulting from
    research conducted with Federal formula funds are not
    considered program income and represent no
    obligation to the Federal government

   Proceeds from the sale of real or personal property
    purchased in whole or part with Federal funds (7 CFR

   All other program income shall be retained by the LGIs
    and used to further program objectives

   Program income is not acceptable as matching funds
There are three types of reporting
requirements for these funds:

   Plan of work
   CRIS
   Financial Reporting
             Plan-of-Work Reporting

   1) Considers the entire portfolio of agricultural research and
    extension formula funds awarded to each 1862 and 1890 land-grant

   Each 1862 and 1890 land-grant institution is required to submit every
    five years a plan of work for their agricultural research and extension
    formula funds authorized under the Hatch Act, Smith-Lever Act, and
    sections 1444 and 1445 of the National Agricultural Research,
    Extension, and Teaching Policy Act.

   Every year LGI’s are required to submit an Annual Report of
    Accomplishments and Expenditures.
Current Research Information System

 Reporting is done on a project basis. Hatch
 research projects are submitted for approval
 to CSREES by the state agricultural
 experiment stations (SAES).

 Each year SAESs submit to the CRIS office a
 progress report and an expenditure report for
 all the Hatch projects they supported in the
 previous year.
                  Financial Reports

   Certification of Offset (Form CSREES-2103) which is completed
    by the SAES's to certify that matching funds have been made

   b) SF-272, Federal Cash Transaction Report, which is submitted
    on a quarterly basis through the U.S. Department Health and
    Human Services' Payment Management System (DHHS-PMS);

   c) SF-269, Financial Status Report, which is submitted on an
    annual basis to the Funds Management Branch by December 31st,
    for the reporting period of October 1st through September 30th.
                AREERA Requirements

   The Agricultural Research, Extension, and Education Reform Act
    of 1998 (AREERA) amended the Smith-Lever Act, the Hatch Act,
    and the National Agricultural Research, Extension, and Teaching
    Policy Act of 1977 (the funding authorities for Extension and
    Research activities) to require approved Plans of Work from
    Extension and Research in order to receive federal funding.

   The AREERA Plans of Work pertain only to the Smith-Lever
    3(b)&(c), Hatch, Evans-Allen, and 1890 Extension funds. Other
    funding authorities such as the Smith-Lever 3(d), NRI, and other
    grants and project funds will continue to require plans or
    proposals for their continued distribution of funds.
                  Hatch Act Funds
   Use must meet AREERA requirements:

      Section 204 of AREERA added Section I to the Hatch Act,
       which states that states must expend for integrated
       research and extension activities in FY 2000 and thereafter
       a percentage that is equal to the lesser of 25 percent or
       twice the percentage of funds expended by the institution
       for integrated research and extension activities in FY 1997.

    (This section also require that the institutions include in the
      plan of work a description of the manner in which they will
      meet these multi-state and integrated requirements.)
UC Next Steps ….

   To meet the increased accountability
    requirements on the use of Hatch Funds, new
    accounts and funds will be used to record
    Hatch expenditures.

   Beginning October 1, 2006 expenditures will
    be charged directly to the new accounts and
UC Next Steps ….

Separate OP fund numbers have been set-up to
  track expenditures for:

   Regular Hatch
   Multi-state Hatch
   Integrated Hatch
   Multi-state / Integrated Hatch
Contact Information:
Jo Ann Javier
Director, Financial Services
Tel:      510-287-3350

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