Financial Guide 2006 - Part III - Chapter 1: Payments
Highlights of Chapter
- Payment Methods
- Notification of Payments
- Withholding of Funds
- Minimum Cash on Hand
- Interest Earned
- Cash Management Improvement Act of 1990
OJP is currently reviewing additional payment methods. The current methods for requesting payment of grant funds are the Phone-Activated Paperless Request System (PAPRS) and the Automated Standard Application for Payments (ASAP). Recipients are required to submit the completed Automated Clearing House (ACH) electronic funds transfer form bearing the original signature of the authorized official of the recipient's financial institution. The Debt Collection Act of 1996 states that all eligible recipients of Federal payments must receive funds electronically. Recipients are also reminded to coordinate with their respective financial institutions for an addendum record which contains payment-related information for their records. Additionally, in order for a recipient to receive payments requested, a current Standard Form (SF) 269A for the grant on which payment is requested must be on file with OJP.
PAPRS allows grant recipients immediate access to OJP funds through the use of a touch-tone telephone. The use of electronic means to transfer money from the U.S. Department of the Treasury (the Treasury) became law under the Debt Collection Improvement Act effective July 26, 1996. Grant recipients should complete and return the ACH Vendor Miscellaneous Enrollment Form (Appendix I) included in the PAPRS information packet and return it to the OJP Control Desk. Through the combined use of PAPRS and ACH, approved requests will be deposited into the grantee's financial institution within 48 hours. Grantees will receive their password/personal identification number (PIN) and corresponding grant identification numbers from OFOC's Accounting Division (AD).
Grantees will receive their password/PIN and grant identification numbers by mail from the OC Customer Service Branch. Instructions for using the PAPRS system are also included. The information is usually mailed within 1 week of the award date of a new grant award. The password is to be given only to authorized persons of the grantee organization and not given to subgrantees. The recipient is solely responsible for the security of this access code.
ASAP uses an Internet connection that operates from either Netscape or Internet Explorer and requires no additional software. ASAP was developed by the Financial Management Service of the U.S. Department of the Treasury and the Federal Reserve Bank of Richmond . ASAP is a recipient-initiated payment and information system designed to provide a single point of contact for the request and delivery of Federal funds. Currently, OJP has initiated a pilot program with some of our grant recipients.
Notification of Payments
Grant recipients will receive an e-mail notification after a payment request has been successfully disbursed by the U.S. Department of the Treasury.
The e-mail notification to the recipients will read as follows:
TO: OJP Grantee/Contractor
SUBJECT: Payment Request
Your payment(s) request has been processed for grant/invoice number(s): XXXX-XX-XXXX. The total amount is $XXX.XX. You should expect to receive payment in your bank account within 48 hours.
If you have any questions concerning this message, please contact our Customer Service Center at 1–800–458–0786 (option 2) or by e-mail at firstname.lastname@example.org.
To update the e-mail address for payment notifications, contact the Customer Service Center as noted above.
Note: In support of the continuing effort to meet the accelerated financial statement reporting requirements mandated by the U.S. Department of the Treasury, the Office of the Chief Financial Officer will not process payment requests during the last 5 working days of each month. For this reason, OJP strongly suggests that grantees make payment requests before 10:00 a.m. eastern standard time, prior to the last 5 working days of each month.
Withholding of Funds
The awarding agency may withhold drawdowns to a recipient organization receiving cash funds by electronic transfer of funds, if the recipient demonstrates any of the following:
- Failure to attain program or project goals or to establish procedures that will minimize the time elapsing between the cash drawdowns and expenditure;
- Failure to adhere to guideline requirements or special conditions;
- Improper engagement of awarding and administering subawards or contracts;
- Failure to submit reliable and/or timely reports, including, but not limited to, Financial Status Reports and Progress Reports; and/or
- Failure to achieve timely financial reconciliation and closeout at the end of the project period of any grant awarded to the recipient organization.
- The recipient organization may be required to finance its operation with its own working funds until such time the recipient is in compliance with award conditions.
Minimum Cash on Hand
Whichever payment method is used, recipient organizations should request funds based upon immediate disbursement/reimbursement requirements. Funds will not be paid in a lump sum, but rather disbursed over time as project costs are incurred or anticipated (with the exception of Local Law Enforcement Block Grants [LLEBG], Juvenile Accountability Block Grants [JABG], and State Criminal Alien Assistance Program Grants [SCAAP] which are paid in a lump sum). Recipients should time their drawdown requests to ensure that Federal cash on hand is the minimum needed for disbursements/reimbursements to be made immediately or within 10 days.
Fund requests from subrecipients create a continuing cash demand on award balances of the State. The State should keep in mind that idle funds in the hands of subrecipients will impair the goals of cash management. All recipients must develop procedures for the disbursement of funds to ensure that Federal cash on hand is kept at a minimal balance.
Recipients and subrecipients shall minimize the time elapsing between the transfer and disbursement of funds. Recipients and subrecipients that administer confidential funds may establish different procedures for administering confidential funds to provide quick access to funds to meet the needs of the project. Also, interest income on LLEBGs and JABGs must be accounted for, reported as program income, and used in accordance with the provisions of Part III, Chapter 4: Program Income of this Guide.
- In accordance with Section 203 of the Intergovernmental Cooperation Act of 1968 (Pub L. 90-577; 31 United States Code [U.S.C.] 6503(a)), a State and its subrecipient and any agency or instrumentality of a State, including State institutions of higher education and State hospitals, but not political subdivisions of a State (cities, towns, counties, and special districts created by State law) SHALL NOT be held accountable for interest earned on grant money pending its disbursement for program purposes.
- This refers to formula grant programs where subawards are made to local jurisdictions. Subrecipients under formula grant programs are held accountable for interest earned on advances.
- In accordance with Sections 102, 103, and 104 of the Indian Self Determination Act (Pub. L. 93-638; U.S.C. 450(j)), tribal organizations SHALL NOT be held accountable for interest earned pending their disbursement by such organizations.
- All local units of government (political subdivisions of a State, including cities, towns, counties and special districts created by State law) shall account for interest earned on Federal funds. Local units of government may keep interest earned on Federal grant funds up to $100 PER FEDERAL FISCAL YEAR. This maximum limit is not per award; it is inclusive of all interest earned as a result of all Federal grant program funds received per year. Interest earned in excess of $100, excluding LLEBGs and JABGs, must be remitted to the U.S. Department of Health and Human Services, Division of Payment Management Services, P.O. Box 6021, Rockville, MD 20852.
- Nonprofit organizations shall account for interest earned on Federal funds. Nonprofit organizations may keep interest earned on Federal grant funds up to $250 PER FEDERAL FISCAL YEAR. This maximum limit is not per award; it is inclusive of all interest earned as a result of all Federal grant program funds received per year. Interest earned in excess of $250 must be remitted to the U.S. Department of Health and Human Services, Division of Payment Management Services, P.O. Box 6021, Rockville, MD 20852.
Note: Interest earned on LLEBGs and JABGs must be accounted for and reported as program income, and used in accordance with the provisions of Part III, Chapter 4: Program Income of this Guide. Any unexpended program income should be remitted to the Office of Justice Programs, Office of the Chief Financial Officer, ATTN: Accounts Receivable Branch, 810 7th Street, NW, Fifth Floor, Washington, DC 20531.
Cash Management Improvement Act of 1990
The Cash Management Improvement Act of 1990 was an amendment to the Intergovernmental Cooperation Act of 1968, 31 U.S.C. 6503. Under this provision, 31 U.S.C. 5(b) of Public Law 101-453, States are no longer exempted from payment of interest to the Federal Government for drawing down funds prior to the need to pay off obligations incurred. The provisions of 31 U.S.C. 6503(c)(1) require that the States pay interest in the event that the States draw down funds before the funds are needed to pay for program expenses.