disbursement and cash management - … cl hr... · hhs, payment management system, rockville, md...

FASFAA Clock Hour Workshop October 25-27, 2015

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Cash Management

For discussion purposes only

FASFAA Clock Hour Workshop

October 25-27, 2016

Cash

Management

David Bartnicki

U.S. Department of Education

Obtaining

& Maintaining

Title IV Funds

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Obtaining TIV Funds

• Establish an account in the Department

of Education’s G5 Payment System

(G5) for requesting funds and reporting

expenditures

• Establish required bank account(s) for

receiving and maintaining funds

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Cash Management


G5 Bank Accounts

• May have one account for all purposes

−Unless required by ED to have multiple accounts

• May have multiple accounts

−Including a separate DL account

• Must designated a bank account from which

refunds will be sent back via G5

−May be same account used for

other G5 processes

−May be different account

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Bank Account Requirements

• Name of account must contain the phrase “Federal

funds”

OR

• Notify bank that account contains FSA funds AND

file a UCC-1 statement with appropriate state or

local governmental entity

−UCC-1 not required for public schools

• Cannot “sweep” federal funds due to potential risk

of loss

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Maintaining & Accounting for Funds

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Must maintain Title IV funds in a depository account insured by

FDIC or NUCA

Eliminate investment accounts

Require interest-bearing depository accounts unless:

School receives less than $120,000 annually

Best available account not expected to earn more than $500 on

Federal cash balances

Bank would require an average or minimum balance so high it

is not feasible in light of Federal/non-Federal cash resources

Consistent with OMB guidance, interest earned over $500 must

be remitted to Dept. HHS no later 30 days after award year

HHS, Payment Management System, Rockville, MD 20852


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Cash Management


Managing Federal Funds

• Schools must not request funds that

exceed their immediate need for those

funds

−Funds received from G5 must be disbursed to

students within three business days of receipt

• Excess Cash

−Any amount of Title IV funds not disbursed to

students by the end of the third business day

after receipt

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Separation of Duties and Internal Controls

• Schools must divide the functions of authorizing

payments and disbursing or delivering funds

• Organizationally independent

• Not members of the same family

• Together do not exercise substantial control over the

school

• Schools must have adequate systems of checks

and balances in system of internal controls

34 CFR 668.16(c)

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Debit Card or

Student Bank

Accounts

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10/30/15 Federal Register; 5/12/16 Elec. Ann.


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Cash Management


Debit Card Provisions: Who is covered?

Tier 1 (T1) Arrangement

• U.S. school with third-party servicer*; and

• Servicer processes direct payments of Title IV aid; and

• Aid disbursed to contracted account or;

• Information about contracted account is provided to student

Tier 2 (T2) Arrangement

• U.S. school that has a contract with provider; and

• Provider is not a third-party servicer; and

• At least one Title IV credit balance recipient in 3 most recently completed award years use account; and

• Product is marketed to students through school communication, student IDs, or cobranded cards

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*Third party servicers defined in GEN-15-01; GEN-16-15

Overview of new requirements

All T1 and T2

Student choice menu

No automatic opening of accounts

Privacy restrictions

Contract disclosure

All T1

ATM network

Fee restrictions

Contracts negotiated in best interest of students

Average student cost disclosure

T2 (more than de minimis)

Fee-free ATM

Contracts negotiated in best interest of students

Average student cost disclosure

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Funding Process


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Cash Management


Funding Basics

• G5 funding

−Specific for each program and for each award year

−Funding is not student specific

• COD disbursements

−Student specific

−Actual disbursements may be reported up to 7 days prior to disbursement date and must be reported no later than 15 days after the disbursement date or adjustment to a previously-made disbursement

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Pell and TEACH Current Funding Level

• Pell and TEACH Grant funding is records first

• Schools submit actual disbursement records to COD

• COD sends data for accepted actual disbursements G5 to create or increase authorization

• G5 makes funds available in the amount of accepted disbursements

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Direct Loan Current Funding Level

• New schools: Loan support team works

with school to determine appropriate initial

funding level

• Continuing schools: Award year initial

authorization based on prior year

disbursement history

• Increases for all schools based on actual

disbursement records accepted by COD

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Cash Management


Administrative Cost Allowance

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• Pell Grant ACA

– Use to defray costs of administering program

– $5 per unduplicated Pell recipient per award year

– As of 2/29/16, Pell Grant ACA payments for 15/16 Award

Year will now be posted in G5 as an Available Balance in the

school’s ACA G5 Award Number, beginning with P063Q

• School must now go into G5 and request the Pell ACA

• Campus-Based ACA (optional)

– Use to defray costs of administering Campus-Based

programs AND Pell Grant Program

– Based on CB expenditures for award year

– School must request and draw down

• Comes from CB federal allocation

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Required Authorizations

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• School must obtain written authorization from

student/borrower prior to:

– Disbursing TIV to a designated bank account

– Using Title IV funds to pay any allowable charges

OTHER than tuition/fees and contracted room/board

– Holding TIV credit balances

– Crediting FWS funds to student account

• Can be rescinded at any time

• Valid for entire time student enrolled


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Cash Management


Required Notices

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• School must notify student of the Title IV funds

student will receive

– How and when funds will be disbursed

– If loan funds are subsidized or unsubsidized

• School must notify borrower of loan funds

received and credited to student account

– Date and amount of disbursement

– Right to cancel all or part of loan

– Cancellation procedures and deadlines

Disbursing Title IV Funds: General & Program Requirements

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Getting Ready to Disburse

• Institution determines eligible

students, amounts and dates for

disbursements

• Institution confirms that student

is still eligible before disbursing

−General eligibility

−Program-specific eligibility

−Period for which student is eligible

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Cash Management


What is a Disbursement?

• School credits student’s account; OR

• Pays student/parent directly

• May use

– FSA funds received from ED

– School funds labeled as FSA funds in advance

of actually receiving FSA funds

• Considered TIV funds at ED set timeframes

• Date of Disbursement

– Student account records and COD

disbursement dates must be the same

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Crediting Student’s Account

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• May only credit account for allowable charges

– Current charges for tuition, fees and room/board if

contracted with school

• No written authorization required

– Current charges for other educationally related

expenses

• Must have written authorization from student or

parent (PLUS)

• Includes – books and supplies (unless meet

exceptions), parking fines, library fines, other goods

and services provided by the school

Direct Payment

Disburse directly to student or to parent (PLUS)

– By check

– Cash (obtain receipt)

– Electronic funds transfer

• Designated student bank account

• Stored value card; Debit card

Tier 1 or Tier 2 account requirements may apply

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Cash Management


Disbursing Funds

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School must disburse Title IV funds a student is

eligible to receive for current payment during that

payment period

Exceptions, late disbursements, retroactive payments, and

payments for prior-year charges

School may credit student’s account with TIV funds to

pay only for charges associated with the current

payment period

School that charges upfront for entire cost of a program (or

charges for more than a payment period) must prorate the

charges

Proration of Payment Period Charges: if charge for more than PP

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For programs with substantially equal PPs:

For all other programs:

Total Institutional Charges for Program

Number of PP in Program = Institutional Charges for PP

= Institutional Charges for PP

Credit or Clock hours in PP

Credit or Clock hours in Program X Total Institutional Charges ( )

Disbursing Funds - Additional Guidance

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• For schools that charge for more hours in a payment

period, IF a student signed an authorization to hold a

TIV credit balance, the school can use the credit

balance funds to cover the additional institutional

(tuition/fees) charges above the payment period

charges for the current year

• Please note - If the student does NOT grant authorization to

hold TIV funds, then the school can only credit TIV aid to cover

the prorated charges of the payment period and must provide

any excess TIV funds to the student within the credit balance

timeframes


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Cash Management


Books/Supplies in Tuition & Fees

Allowed if

School has arrangement

with book publisher or other entity

Books/supplies available to students for prices below competitive market rates

Provides a way for students to

obtain the books and

supplies by the seventh day of the payment period, and

Has a policy permitting

students to opt out*

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*opting out also opts out of book and supply disbursements under 668.164(m)

Books/Supplies in Tuition & Fees

Also allowed if: The books and supplies are not available elsewhere or

accessible by students from sources other than

those provided or authorized by the school,

OR

The school documents there is a compelling

health or safety reason

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Disbursements for Books & Supplies

• Must provide a method for all TIV recipients to obtain books & supplies no later than the 7th day of a payment period if

−Title IV funds could have been disbursed 10 days before beginning of payment period, and

−Disbursed funds would have created a Title IV credit balance

Applicable to all TIV recipients, not just Pell eligible students, as of July 1, 2016

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Cash Management


Disbursements for Books & Supplies

• Must provide the lesser of

−The Title IV credit balance, or

−Amount needed by student, as determined by the

school

• Must determine the method(s) for assisting students

with purchasing books & supplies

• If student utilizes the method, the student is

considered to have authorized the use of funds, for

this purpose only

• Student able to “opt out” of school process

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Early Disbursements

• If the student is enrolled in a clock-hour program, the later of

– 10 days before the first day of classes of a payment period; or

– The date the student completed the previous payment period for which he or she received Title IV, HEA program funds

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Early Disbursement Exceptions

• First disbursement of DL to 1st-year, 1st-time borrower

– May not credit student’s account or release funds until

30 days after first day of the student’s program of study

• For single term loans

– Must make two equal disbursement of loan proceeds

– Second disbursement may not be made prior to the

calendar midpoint of the payment period

Rule does not apply to schools with cohort default

rate <15% for the three most recent years for which

data has been published

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Cash Management


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Entrance Counseling

• Required for

−First-time Direct Loan borrowers

−First–time Grad PLUS borrowers

• Must be completed prior to the

first disbursement of the loan

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Late Disbursements

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– For Direct Loans

• A disbursement made after the student is no

longer enrolled at least half time

– For all other TIV aid (accept FWS)

• A disbursement made after the student is no

longer enrolled

– Must be made within 180 days after student

became ineligible

Need a valid ISIR/SAR to actually pay any TIV funds

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Conditions for Late Disbursement

• For all programs, while student was eligible, ED

processed ISIR/SAR with official EFC and for

−For Direct Loan - originated within school system

• Origination Date not associated with submission or

ED record approval

• 30-day delay passed, if applicable

−For Perkins and FSEOG - funds were awarded prior

to student leaving school

−For TEACH Grant – grant was originated

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Cash Management


Second DL Disbursements

Late second or subsequent

disbursements of Direct Loans

may not be made unless

student has graduated or

successfully completed the

period of enrollment

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Reimbursement and HCM

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Reimbursement/HCM2

• Must credit student’s ledger account AND PAY any credit balances due to the students BEFORE requesting reimbursement

• May not obtain authorization to hold credit balance funds

• Must provide documentation as part of its request that the credit balances were paid

HCM1

• Must credit student’s ledger account AND PAY any credit balances due to the students BEFORE submitting a request for funds

• May not obtain authorization to hold credit balance funds

Must include all Title IV funds student is eligible for

when determining Title IV credit balances

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Credit Balances

&

Prior Year Charges


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Cash Management


Title IV Credit Balance

Title IV funds credited exceed total allowable

charges assessed by the institution

Institutional Charges = $3,000

Credits to account = $6,147

Pell $1,875

Sub DL $1,272

FSEOG $2,000

Scholarship $1,000

Title IV Credit Balance = $2,147

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Paying Title IV Credit Balance

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• School must pay credit balance to student or parent (if PLUS) no later than

– 14 calendar days after balance occurs if it occurs after first day of classes of payment period

– 14 calendar days after first day of classes if it occurs on or before the first day of classes of payment period

Paying Credit Balance: Check

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• Considered paid on date

–School mails check

–Notifies student within 14 day timeframe

that funds are available for immediate

pick-up and provides specific location

• Can hold for 21 days from notification

• If student doesn’t pick up within 21 days

from notification, must immediately mail or

EFT, or return to ED


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Cash Management


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Holding Credit Balances

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• Student or parent may voluntarily authorize

school to hold credit balance

• School must

– Identify amount of funds held for each student/

parent in a subsidiary ledger account

– Maintain cash equal to credit balances held

• School may retain interest earned on funds

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Holding Credit Balances

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• School must pay remaining balance

–Loan funds by end of the loan period

–Other FSA program funds by end of last

payment period in award year for which

they were awarded

Note: May not go beyond these deadlines even with

student or parent authorization!

Prior Year Charges

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• Ability to use current TIV funds to pay minor prior year

charges

• Prior year charges – up to $200

• “Year” – loan period if Direct Loan

• “Year” – award year if NO Direct Loan

• Determine the “Year” for each Payment Period/Term

– New flexibility as of July 1, 2016 – if student has a DL and

other TIV aid in a payment period, the school can determine

if the prior year is a loan period or award year

• Student/Parent cannot provide authorization to pay for

more than $200


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Cash Management


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Resources

• IFAP – www.ifap.ed.gov

• FSA Handbook

− Volume 2, Chapters 3 and 4 (Fiscal Responsibilities)

− Volume 4 (Cash Management)

− Volume 6 (Campus-Based Programs)

• 34 CFR 668 Subpart K (.161- .166) Cash Management

• FSA Assessments

− http://www.ifap.ed.gov/qahome/fsaassessment.html

− Fiscal Management; Return to Title IV Funds; Federal

Perkins Loan

• fsatraining.info (various training modules)

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10/3/16– Cash Management Resource

• New Cash Management Information page

– Include links to relevant Dear Colleague Letters,

Electronic Announcements, webinars, and other

cash management resources

– Right-hand side of IFAP

– Questions can be submitted to - [email protected] (answers will not be provided directly but may be used to create formal Q & As)

Electronic Announcements

http://www.ifap.ed.gov/

http://www.ifap.ed.gov/qahome/fsaassessment.html

mailto:[email protected]


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Cash Management


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Contacts

• Atlanta School Participation Team

– Main Number: 404-974-9303/9335

– Arva Thomas (IIS) 404-974-9412

– Cassandra Weems (IIS) 404-974-9305

• Atlanta Training Officers

– David Bartnicki – 404-974-9312

Email: [email protected]

Training Feedback

To ensure quality training we ask all participants to

please fill out an online session evaluation

• Go to http://s.zoomerang.com/s/DavidBartnicki

• Evaluation form is specific to David Bartnicki

• This feedback tool will provide a means to educate and

inform areas for improvement and support an effective

process for “listening” to our customers

• Additional feedback about training can be directed to

[email protected]

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Questions?

http://s.zoomerang.com/s/DavidBartnicki

http://s.zoomerang.com/s/DavidBartnicki

mailto:[email protected]

disbursement and cash management - … cl hr... · hhs, payment management system, rockville, md...

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