To further assist ACL Grantees with the federal requirements around Cash Drawdowns found in 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements, please see the guidance below.
Per 2 CFR Part 200.305 grantees are expected to expend funds within a reasonable amount of time from the draw and should not be drawing in one lump sum unless allowable expenses exist to justify the draw.
For any cash that a grantee draws from its ACL grant account, the grantee must:
- draw down only as much cash as is necessary to meet the immediate needs of the grant project;
- keep to a minimum the time between drawing down the funds and paying them out for grant activities; and
- return to the Department of Health and Human Services via the Payment Management System (PMS) the interest earned on grant funds deposited in interest-bearing bank accounts except for a small amount of interest earned each year that the grantee is allowed to keep reimbursing itself for administrative expenses. (Under the Uniform Guidance (200.305(b)(9)), non-State recipients of federal financial assistance awards who earn interest on federal funds in excess of $500 per year must be returned to the federal government annually. Amounts up to $500 may be retained by the recipient for administrative expenses).
In order to meet these requirements, grantees are urged to:
- take into account the need to coordinate the timing of drawdowns with prior internal clearances (e.g., by boards, directors, or other officials) when projecting immediate cash needs so that funds drawn down from HHS PMS do not stay in a bank account for extended periods of time while waiting for approval. Historically, ACL has interpreted “immediate cash requirements” as 30 days or less of advance funding;
- monitor the fiscal activity (drawdowns and payments) under each grant on a continuous basis;
- financial reconciliation ensuring that reported federal cash status and expenditure information are equal, including making any necessary adjustments, e.g., for an overpayment;
- plan carefully for cash flow in each grant project during the budget period and review project cash requirements before each drawdown; and
- pay out grant funds for project activities as soon as it is practical to do so after receiving cash from HHS PMS.
With respect to any OAA funds to be transferred by a SUA to a AAA or to another OAA service provider, the SUA is required to minimize the time that elapses between the transfer of OAA funds by the SUA to the AAA (or to another provider) and the expenditure of those funds by the AAA or other provider (see 2 CFR §200.305(b)). Among other things, 2 CFR §200.305(b) requires that advance payments by the SUA to AAAs/providers be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the AAAs/providers in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the AAA/provider for direct program or project costs and the proportionate share of any allowable indirect costs. (Historically, ACL has interpreted “immediate cash requirements” as 30 days or less of advance funding.) All SUAs should have a written policy with respect to advance payments to AAAs and other OAA service providers that complies with all applicable federal requirements.
Keep in mind that ACL monitors cash drawdown activity for all grants on a weekly basis. ACL staff will contact grantees who appear to have drawn down excessive amounts of cash under one or more grants during the fiscal quarter to discuss the particular situation. Grantees determined to have drawn down excessive cash will be required to return the excess funds to HHS PMS, along with any associated earned interest, until such time as the money is legitimately needed to pay for grant activities. If you need assistance with returning funds and interest, please check PMS site: https://pms.psc.gov/grant-recipients/returning-funds-interest.html, contact HHS PMS Hotline by calling 1-877-614-5533, or via email at firstname.lastname@example.org
Grantees that do not follow federal cash management requirements and/or consistently appear on the ACL’s reports of excessive drawdowns could be:
- subject to specific award conditions or designated as a "high-risk" grantee [2 CFR Part 200.207 and 2 CFR 3474.10], which could mean being placed on a "cash-reimbursement" payment method (i.e., a grantee would experience the inconvenience of having to pay for grant activities with its own money and waiting to be reimbursed by the Department afterwards);
- subject to further corrective action; and/or
- debarred or suspended from receiving future federal awards from any executive agency of the federal government.
ACL encourages grantees to read and be familiar with 2 CFR Part 200.305 to learn more about federal requirements related to grant payments and to determine how to apply these requirements to any subgrantees. Consider making copies of this memorandum and share it with all associated individuals within your organization. If you have any questions or need additional information, please contact your assigned Financial Operations Specialist, found on acl.gov: https://acl.gov/grants/acl-mandatory-grants-programmatic-and-fiscal-contacts.