All non-profit organizations that receive grants or have cooperative agreements with the US Department of Education are subject to regulations that guide their fiscal and programmatic practices. These regulations are called EDGAR (Education Department General Administrative Regulations) and are found in volume 34 of the Code of Federal Regulations (CFR). The requirements of EDGAR that we discuss here are found in Parts 74 and 75.

Since Rehabilitation Services Administration (RSA) Regional office staff administrate Title VII grants in all but a few cases, ILRU requested their assistance in identifying the questions most commonly asked by centers for independent living (CILs) regarding the operation of centers under EDGAR. The following are those questions and their answers:

1. May CILs re-budget or revise grant funds?
2. May CILs purchase equipment with grant funds?
3. May CILs use carryover funds?
4. What is program income? How and when must program income be used?
5. When do CILs need approval for programmatic changes?
6. Do CILs need to complete the SF 269?
7. Are there any other reporting requirements for CILs?
8. What are "indirect costs?"
9. What kind of staff time records does EDGAR require?
10.Where can I get more information about EDGAR?

1. May CILs re-budget or revise grant funds?

The budget is the financial centerpiece of any project or program awarded a grant. Rules governing revisions have been liberalized, allowing centers to make most revisions without gaining prior approval.

CILs need prior approval when there are changes in the scope or objectives of the grant, changes in key personnel, long-term absences of key grant staff, the need for more Federal funds, or the sub-award, transfer or contracting out of any work not described in the approved application.

Centers rarely make changes in the scope of the grant because Title VII Part C funding is intended for the general operation of the center, and because centers have such a broad mission.

CILs, which are confused about whether a budgetary change requires prior approval, are encouraged to contact their Regional office.

Regulation: 34 CFR 74.25 and 75.264

2. May CILs purchase equipment with grant funds?

CILs may purchase equipment if the items are budgeted in the grant award. The title to the equipment remains with the center, although the CIL must inventory the equipment at least every two years and maintain adequate records such as the item's description, serial number, date of purchase/receipt, ownership, etc. When no longer needed for the grant, the CIL can use the equipment for other activities sponsored by the
Federal government. If the equipment is no longer needed at all, there are rules governing its disposal.

Regulation: 34 CFR 74.

3. May CILs use carryover funds?

Carryover funds are those award funds that are not spent during the fiscal year in which they were awarded. A CIL may obligate and expend carryover funds in the fiscal year succeeding the fiscal year in which the funds were awarded. CILs should understand that Title VII Part C funds intended for the operation of CILs are not awarded to centers until the end of the fiscal year in which they are appropriated. Therefore, in reality, centers only have the one fiscal year following the fiscal year in which funds were awarded in which to spend them. Part B funds are not subject to the same time restrictions and may be carried over into the next fiscal year (subject to approval from the State VR Agency that awarded the funds to the CIL).

Regulation: 34 CFR 364.6

4. What is program income? How and when must program income be used?

Program income is gross income directly generated by or earned as a result of a grant
activity. This can include, but is not limited to, fees for services performed, the use or rental of real or personal property acquired under the grant, the sale of items or commodities fabricated under and award, royalties, profits, and interest earned on loans. It does not include income earned after the end of the grant period.

Program income may be used to further the objectives of the grant or reduce the total project costs of the project.

Program income is treated like other grant funds and may be carried over for one year.

Regulation: 34 CFR 74.2 and 74.24

5. When do CILs need approval for programmatic changes?

As with budget revisions, grant recipients must request prior approval from RSA of program revisions when there is change in the scope of the project, change in key personnel, the long-term absence of key staff, a significant (25% or more) reduction in time devoted to the project by the Project Director, the need for additional Federal funds, or the sub-award, transfer or contracting out of any work not described in the
application. Otherwise, no prior approval is necessary, but the CIL must report deviations from its program plans.

Regulation: 34 CFR 74.25

6. Do CILs need to complete the SF 269?

The SF (Standard Form) 269 is the Financial Status Report, which must be completed
annually by CILs. It is used to report on the fiscal status of grant income and expenditures for the reporting period.

The Department may require that the form be completed as often as quarterly, but never less frequently than annually. Quarterly reports are submitted within 30 days of the end of the quarter, and annual reports are submitted within 90 days of the end of the contract year. An extension of reporting due dates may be approved if the CIL requests it.

The report itself is straightforward and relatively easy to complete. Regional Office staff report that the most errors on the SF 269 are clerical in nature.

7. Are there any other reporting requirements for CILs?

In addition, CILs must comply with the requirements of Sec. 704 of the Rehabilitation
Act (Title IV of the Workforce Investment Act of 1998), by completing the annual performance report, otherwise known as the "704 Report." The 704 Report addresses 1) the CIL's compliance with the standards and indicators for centers for independent living and 2) the CIL's progress in addressing the goals and objectives set out in the grant.

The CIL must also make arrangements for an annual independent fiscal audit as required by Section 725(c)(7) of the Rehabilitation Act.

In some circumstances, RSA may impose special award considerations for centers that have not, for one reason or another, conformed to Department requirements. If this happens, the RSA Regional Office staff, on behalf of the Department, will inform the center what the special requirements are, why they have been imposed, what steps the CIL needs to take to resolve the problem, how much time the CIL has to resolve the problem, and how the CIL can request reconsideration of the additional requirements.

Regulation: 34 CFR 74.14 and 74.51

8. What are "indirect costs?"

Here's the definition from the Office of Management and Budget's Circular A-122:

Indirect costs are those that have been incurred for common or joint objectives and cannot be readily identified with a particular final cost objective.

Indirect costs are typically incurred by organizations that receive their funding from
more than one source and have more than one objective. Some examples of indirect costs are organization-wide costs that are not attributable to a particular project at the organization but are necessary for the functioning of the project and the organization, such as salaries and expenses of executive officers, personnel administration and accounting or the cost of operating and maintaining facilities.

EDGAR refers recipients to the cost principles set out in Circular A-122 that discuss the differences between direct and indirect costs and the principles for determining the general indirect cost rate that a grantee may use.

All CILs that want to claim indirect costs in their grants must establish an indirect cost rate first. They do this by developing an indirect cost rate proposal, which follows the guidelines set out in Circular A-122, determining the percent of their total budget represented by indirect costs, and submitting it to the U.S. Department of Education's Indirect Cost Determination Staff for approval. A CIL must have a current indirect cost rate agreement with the Department of Education to charge indirect costs to a grant. The Department generally approves indirect cost rate agreements annually.

Regulation: 34 CFR 74.27, 75.560, 75.561, and 75.564

9. What kind of staff time records does EDGAR require?

OMB Circular A-122 refers to staff wages, fringe benefits, and all similar bonus and incentive pay as "personal services." Pay for personal services includes all compensation paid currently or accrued by the CIL out of grants from the Department of Education and is based on time distribution records kept by the center.

For each Department of Education grant, CILs must keep records that show the number of hours or the percentage of the employee's time spent on the grant-funded project. In essence, the time sheets must indicate how much of an employee's time is specifically spent on grant activities, with the government being billed accordingly.

Regulation: 34 CFR 74.27 and 74.53

10. Where can I get more information about EDGAR?

Every recipient of a grant award from the Department of Education should make sure they have a copy of EDGAR. Most regional offices routinely distribute copies of EDGAR to CILs, but if you do not have one you may obtain the latest version of EDGAR at: http://ocfo.ed.gov/grntinfo/edgar.htm.
You may also secure a copy of Circular A-122 at http://www.whitehouse.gov/omb/circulars/a122/a122.html/

Acknowledgements

This fact sheet was prepared by Bob Michaels. We extend our appreciation to Gayle Palumbo, RSA Management & Program Analyst in Region IX and James Billy, Chief, Independent Living Branch, RSA, for agreeing to review these responses.

The IL NET is a collaborative project of Independent Living Research Utilization (ILRU) and the National Council on Independent Living (NCIL), with funding from the Rehabilitation Services Administration.

ILRU is a program of The Institute for Rehabilitation and Research (TIRR), a nationally
recognized, freestanding medical rehabilitation facility for persons with physical and cognitive disabilities. TIRR is part of TIRR Systems, which is a not-for-profit corporation dedicated to providing a continuum of services to individuals with disabilities.

This FAQ on EDGAR may be reproduced for noncommercial use without prior permission if the author and ILRU are cited.

More information on EDGAR located here!

July 2003

The mission of the IL NET is to provide training and technical assistance on a variety of issues central to independent living today--understanding the Rehab Act, what the statewide independent living council is and how it can operate most effectively, management issues for centers for independent living, systems advocacy, computer networking, and others. Training activities are conducted conference-style, via long-distance communication, webcasts, through widely disseminated print and audio materials, and through the promotion of a strong national network of centers and individuals in the independent living field.

Substantial support for development of this publication was provided by the Rehabilitation Services Administration, U.S. Department of Education. The content is the responsibility of ILRU and no official endorsement of the Department of Education should be inferred.

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