Skip to main content
Home
Mailing List

Financial Management & Budget

Focus areas

 

The Fiscal Management of a VR Program is a paramount function of the overall organizational effectiveness of an agency. Without proper financial management, 
agencies run the risk of allocating and expending funds erroneously, which may lead to the provision of ineffective services and improper payments.

Understanding the fundamental elements of financial management, as outlined in federal statute and regulations, such as the UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (Uniform Guidance), the code of federal regulations for STATE VOCATIONAL REHABILITATION SERVICES PROGRAM, and The Rehabilitation Act of 1973, as amended by title IV of the Workforce Innovation and Opportunity Act (WIOA), is essential for ensuring that agencies not only remain in compliance with all funding requirements, but that agencies are empowered to make legal and ethical decisions.

The overarching goal of this VR Program Fiscal Management information is to provide tools and resources to help your agency understand the most prominent components of financial management.

These resources can help agencies…

  • Plan expenditures effectively;
  • Make expenditures effectively;
  • Track expenditures effectively; and
  • Report expenditures effectively.

The end result of sound fiscal practices is to assist VR programs in achieving program objectives related to individuals with disabilities obtaining employment. 
Questions about the topics on this page can be sent fiscal@vrtac.org.

Back to Top

Regulatory Framework: VR, EDGAR, and CFR 200

These resources provide a comprehensive collection of regulations, sub-regulatory guidance, and key references, including 2 CFR 200, to support VR programs and to help VR professionals navigate compliance requirements, fiscal responsibilities, and programmatic standards, ensuring alignment with Federal guidelines.

Resources

Back to Top

Grant Award Issuance

Receiving Federal grant awards is imperative to the effective administration of VR programs as Federal funding may account for approximately 78.7% of a state’s overall VR budget. Not only can this funding be used for indirect expenditures, such as the salaries for administrative and clerical staff, but it may also be used for direct expenditures that are critical to the mission of serving those with the greatest barriers to employment.

Understanding the basic elements of Federal funding is important because, in the event that funding is used inappropriately, VR agencies may be subject to sanctions as outlined in 2 CFR § 200.339.

The following are important basic concepts to understand regarding grant award issuance:

President's Budget

The President initiates the annual budget cycle with the submission of an annual budget proposal for the upcoming fiscal year to Congress. The President is required to submit the annual budget on or before the first Monday in February. However, Congress has provided deadline extensions both statutorily and, sometimes, informally.

The President recommends spending levels for various programs and agencies of the Federal government in the form of budget authority (BA). Such authority does not represent cash provided to or reserved for agencies. Instead, the term refers to authority provided by Federal law to enter into contracts or other financial obligations that will result in immediate or future expenditures (or outlays) involving Federal government funds. Most appropriations are a form of BA that also provides the legal authority to make the subsequent payments from the Treasury. See The Congressional Appropriations Process: An Introduction | Congress.gov. 

The U.S. Department of Education posts the budget tables from the President’s Budget on the Department’s website. These are recommendations that are not representative of the funds agencies will receive. Do not view these as a hard line for budget planning.

Budget Resolution

The budget resolution is Congress’s response to the President’s budget. It is a concurrent resolution because it is an agreement between the House and Senate that establishes overall budgetary and fiscal policy to be carried out through subsequent legislation. The budget resolution must cover at least five fiscal years: the upcoming fiscal year (referred to as the “budget year”) plus the four subsequent years.

The budget resolution is not sent to the President and does not become law. It does not provide budget authority or raise or lower revenues; instead, it is a guide for the House and Senate as they consider various budget-related bills, including appropriations and tax measures.

Law establishes April 15 as the target date for congressional adoption of the budget resolution. Since FFY 1977, Congress has frequently not met this target date. In recent years, Congress often did not adopt a budget resolution.

There is no penalty if the budget resolution is not completed before April 15, or not at all.

Appropriation Measures

When considering appropriations measures, Congress exercises the power granted to it under the Constitution, which states, “No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

The Antideficiency Act explicitly prohibits Federal government employees and officers from making contracts or other obligations in advance or in excess of an appropriation, unless authorized by law, and providing administrative and criminal sanctions for those who violate the act.

Under law, public funds may be used only for the purpose(s) for which Congress appropriated funds.

The timing of the various stages of the appropriations process tends to vary from year to year.

The Senate appropriations Committee typically begins reporting the bills in June and generally completes the committee consideration prior to the August recess. The Senate typically begins floor consideration of the bills beginning in June or July.

Back to Top

Conference Action

Once the House and Senate have both completed initial consideration of an appropriations measure, the Appropriations Committees in each chamber will endeavor to negotiate a resolution of the difference between their respective versions. The practice has generally been for the House and Senate to convene a conference committee to resolve differences between the chambers on appropriations bills. Alternatively, agreement may be reached through an exchange of amendments between the houses.

Regular appropriations bills contain a series of unnumbered paragraphs with headings, generally reflecting a unique budget account. Under these measures, funding for each department and large independent agency is organized in one or several accounts. Each account generally includes similar programs, projects, or items, such as a salaries and expenses account, although a few accounts include only a single program, project, or item.

Presidential Action

Under the Constitution, after a measure is presented to the President, the President has 10 days to sign or veto the measure. If the President takes no action, the bill automatically becomes law at the end of the 10-day period if Congress is in session. Conversely, if the President takes no action when Congress has adjourned, the President may pocket veto the bill.

Continuing Resolution

In general, budget authority provided in regular appropriations expires at the end of the FFY, September 30, unless otherwise specified. If action on one or more regular appropriations measures has not been completed by the start of the FFY, on October 1, the agencies funded by these bills must cease non-excepted activities due to lack of budget authority.

Continuing resolutions (CR) maintain the pre-existing appropriations at the same levels as the previous fiscal year (or with minor modifications) for a set amount of time. CRs typically provide temporary funding until a specific date or until the enactment of the applicable regular appropriations acts, if earlier. Once an initial CR becomes law, subsequent interim CRs may be used to make additional funds available.

In the event that Congress enacts a regular appropriation after a CR, the annual formula award amount to be received by each grantee will be calculated based upon the amount of the appropriation. Then, the total amount of funds awarded to the grantee through previous CRs will be subtracted from the annual formula award amount to determine the remaining balance due the grantee. This is important for fiscal planning purposes in the event there are multiple CRs and Congress enacts an appropriation at a funding level less than the previous FFY on which the CRs were based.

Mandatory Spending

Mandatory spending is composed of budget outlays controlled by laws other than appropriation acts, including Federal spending on entitlement programs.

As a mandatory program, the VR program’s annual spending authority is generally increased by the Consumer Price Index for all Urban Consumers percentage. However, the final total spending authority amount can be affected by Congressional action (e.g., sequestration).

It is important to understand the budget process because it affects: 
 

  • The amount of funds each grantee receives;
  • When RSA can provide information to grantees regarding grant award amounts for a FFY;
  • The timeframe in which the initial and, if necessary, subsequent grant awards may be issued; and
  • The number of grant award supplements a grantee receives.

Back to Top

Grant Award Issuance

RSA’s grant award internal controls are contained in Standard Operating Procedures developed in accordance with Department policies that are updated at least annually and approved by the Department’s Risk Management Services.

Back to Top

VR Award Formula Variables

The Rehabilitation Act, as amended, sets out a formula for distributing VR grants to states and territories. Through this formula, a portion of the funds appropriated for the VR program are distributed to states based upon the grant allotment they received for fiscal year 1978. States’ 1978 allotments served to ensure that no state experienced a funding decrease when the formula was revised through a 1978 amendment to the Rehabilitation Act. Of the remainder of the funds, one-half is distributed based upon states’ general population and a factor that compares their per capita income to the national per capita income, and the other one-half, according to their population and the square of the per capita income factor. The larger a state’s population, the more funds it will receive. Conversely, the higher a state’s per capita income compared to the national level, the lower its allotment will be. The squaring of per capita income increases its influence on a state’s allotment. However, the formula mitigates the effect of per capita income for states with very high or very low per capita income levels by setting upper and lower limits. Ultimately, the final allotment for a state cannot be less than one-third of 1% of the total amount appropriated, or $3 million, whichever is greater. In Federal fiscal year 2020, the minimum allotment was approximately $11 million.

Per Capita Income: The three-year average per capita income (PCI) average is calculated using the three most recent years of PCI data (available from the U.S. Department of Commerce, Bureau of Economic Analysis) that meet the requirements in Section 8(a)(2) of the Rehabilitation Act. PCI data is updated on each even-numbered year.

Population: Updated annually and is furnished by the U.S. Department of Commerce, Bureau of the Census by October 1 of the year preceding the fiscal year for which funds are appropriated.

When there are two VR agencies, the state is responsible for providing RSA with the percentage of the state’s VR and Supported Employment allotment that is to be awarded to each agency. Upon receipt of the state’s percentages, RSA will continue to allot Federal VR and Supported Employment funds to each agency until such time as the state submits a formal request to change the allotment percentage(s).

U.S. Bureau of Labor Statistics Consumer Price Index

Issuance Time Frame

Generally speaking:

  • Due to factors both within and outside the control of RSA, the agency works to issue grant awards or supplements within three to four weeks after the funds are made available; and
  • If there is a short-term CR that would expire before RSA could issue the funds, the short-term CR funds are combined with the subsequent CR.
G6

G6, which can be accessed at g6.ed.gov, is the Department’s grant management system from which the following is entered and tracked:

  • Grant award amounts for the initial grants are entered into G6 manually and verified by RSA fiscal unit staff employing a clear separation of duties;
  • Federal Awardee Performance and Integrity Information System (FAPIIS) checks are completed;
  • Unique Entity Identifier (UEI) information is verified;
  • Specific Conditions or High-Risk Status language is added to the grant awards as needed;
  • Grant Award Notifications (GAN) are created and signed electronically; and
  • Grant awards are obligated and the GAN email is sent to grantees.

Note: List is not exhaustive.

Grant Award Notifications

RSA GAN Attachments

Reallotment/Relinquishment of Funds

Reallotment is the process in which funds that cannot be used by one grantee, due to inability to meet non-Federal share requirements or inability to fully expend Federal funds, are relinquished by the original grantee and awarded to other grantees by the Commissioner of RSA (Section 110(b)(1) of the Rehabilitation Act and 34 CFR § 361.65(b)).

The reallotment process maximizes the use of appropriated funds under the State Vocational Rehabilitation Services (VR), Independent Living Services for Older Individuals Who are Blind (OIB), and State Supported Employment Services. Any funds received during reallotment are one-time funds and do not represent an ongoing addition to the State’s formula award allotment. Funds relinquished in reallotment represent a one-time reduction to the State’s funds and will not affect subsequent year formula grant award calculations.

Prior to requesting funds in reallotment, the State must ensure it can provide the required match (21.3% for VR, 10% for OIB, and 10% for the total amount of expenditures incurred with the half of the allotment reserved to provide Supported Employment services to youth with the most significant disabilities) for the additional funds received by September 30th of the FFY in which the funds are appropriated.

The total amount of funds available for reallotment in the VR program are dependent upon the amount of: 

  • Funds relinquished by VR agencies for the current FFY; and
  • MOE deficits incurred by States that are not waived by the Secretary during the current FFY (i.e., MOE reductions).

States that request funds in reallotment and incurred an MOE reduction earlier in the FFY will have the MOE reduction amount deducted from the available pool of reallotment funds before determining the amount of additional VR funds awarded to the State through the reallotment process. This process ensures that a State cannot benefit from its own MOE reduction.

Example: An FFY 2019 MOE deficit was identified in January 2021 and an MOE reduction was levied in October 2021 against the FFY 2022 VR award.

  • The MOE reduction would be included in the FFY 2022 VR reallotment pool; and
  • The State VR agency incurring the MOE reduction will not be able to receive those funds back through FFY 2022 reallotment, but may receive other relinquished funds or MOE reductions incurred by other States.

Back to Top

Transfer of Funds Between General and Blind Agencies

In some cases, such as when there is a belief that matching requirements will not be met for the State or when one State VR agency can benefit from additional funding, a State may opt to transfer funds between its General and Blind agencies.

Note:If you are in a State with a General and Blind agency and wish to transfer funds between the agencies, YOU MUST formally request that RSA transfer the funds between awards. The VR and Supported Employment funds allotted to each agency by RSA may ONLY be used for the provision of the VR or Supported Employment services assigned to the agency under the vocational rehabilitation services portion of the Unified or Combined State Plan. For example, a VR agency that serves individuals who are blind may not use its VR funds for the provision of VR services to individuals that are not eligible to receive services through the blind agency. VR agencies that serve all disabilities do not face similar limitations as they are statutorily required to serve all groups.

Because the VR funds awarded under a Unified or Combined State Plan can only be used for consumers that are included in that agency’s plan, RSA must officially transfer funds between General and Blind agency awards. DO NOT use internal accounting adjustments to transfer funds between the two programs.

RSA processes the transfer by reducing the Federal funds allotted to one agency and then transfers the funds to the other agency. State VR agencies must ensure sufficient Federal award funds remain to be transferred and that sufficient non-Federal share was/can be met in the year of appropriation for the transferred Federal award funds. Requests to transfer funds during the carryover period of an award take additional time for RSA to process. Upon receipt of such a request, RSA must first de-obligate the funds being transferred and then submit a request for approval to award prior year funds. After obtaining permission to obligate prior year funds, RSA will obligate the funds to the receiving agency. This process may take up to 30 calendar days to complete. The Department of Education reserves the right to deny any transfer of funds requests submitted near the end of the period of performance for an award. VR agencies must provide RSA sufficient time to transfer the funds and ensure the receiving agency has time to obligate and liquidate the additional funds received prior to the end of the period of performance.

Contact your RSA Financial Management Specialist for details regarding how to submit a request to transfer funds between Blind and General awards.

Resources

Optimizing Collaboration: A Guide to Cooperative Agreements Between Blind and General VR Agencies - Coming soon

Back to Top

Financial Reporting

Proper internal controls that provide accurate and timely financial reporting is important because it helps you and RSA determine if the requirements of 2 CFR § 200.302 (Financial Management) and 34 CFR, part 361, subpart C (Financing of State Vocational Rehabilitation Programs) are met. Furthermore, financial reporting may be used as a tool for fiscal forecasting. This can help you streamline and enhance the quality and efficiency of services that your State agency provides. It is noteworthy that internal control deficiencies in this area represents one of the most common fiscal findings identified by RSA through monitoring.

In accordance with 2 CFR § 200.328, financial reporting, as approved by the U.S. Office of Management and Budget, "must collect financial reports no less than annually. The Federal agency may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with §200.208. To the extent practicable, the Federal agency should collect financial reports in coordination with performance reports." The recipient "must submit financial reports as required by the Federal award. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period." The final financial report "must be due no later than 120 calendar days after the conclusion of the period of performance. See also §200.344".

Resources

Back to Top

Internal Controls

2 CFR § 200.1 Definition-Internal Controls and 2 CFR § 200.303 Internal Controls are two important references when looking at internal controls.

Internal controls means a process, implemented by State agencies, designed to provide reasonable assurance regarding the achievement of objectives in the effectiveness and efficiency of operations, reliability of reporting for internal and external use, and compliance with applicable laws and regulations.

Internal controls serve to safeguard assets and prevent fraud, waste, abuse, improper payments, and mismanagement. They include methods and procedures the agency uses to manage the day-to-day operations of grant-supported activities to assure compliance with applicable Federal requirements and that performance goals are being achieved.

There is no standardized set of internal controls as they will differ based on each agency’s structure, processes, and State requirements.

RSA’s review of internal controls is to determine whether the agency’s internal controls meet the requirements at 2 CFR § 200.303 Internal Controls that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.

The State is authorized to adopt any set of internal controls that meets the requirements at >§ 200.303.

Resources

State Single Audit Requirement

The government passed the Single Audit Act of 1984, as amended in 1996, to ensure that organizations receiving Federal grants use the funds in compliance with the Federal government's requirements.

So even though RSA is not coming out each year to look at your financials, the State Legislative Auditor is performing this function on behalf of the Federal government.

The Federal government provides instructions to the State Legislative Auditor on focus areas for this audit: 2025 Compliance Supplement. The Compliance Supplement is based on the requirements of the 1996 Amendments and 2 CFR part 200, subpart F, which provides for the issuance of a compliance supplement to assist auditors in performing the required audits. CFDA 84.126 Rehabilitation Services- Vocational Rehabilitation Grants to States can be found starting at page 4-84.126-1 Department of Education (ED).

This is even more reason to ensure your financial house is in order, you have a good understanding of the requirements, and you are able to demonstrate you have used the Federal funds according to requirements.

Many times, auditors are unfamiliar with your particular program and may come to a different conclusion. For example, they may question the allowability of consumer purchases such as buying llamas for a self-employment plan. If you run into issues and the audit team is not listening to you, we recommend that you have the auditors call RSA and talk to the Fiscal Team. However, while the Compliance Supplement is provided for consideration for auditors, there is no requirement for them to use it. State auditors may write audit findings inconsistent with VR requirements or program regulations, but RSA may choose not to sustain the findings.

Back to Top

Related Resources

Financial Management & Budget
99 Family Education Rights and Privacy
99 Family Education Rights and Privacy...
Learn more
Financial Management & Budget
76 State-Administered Programs
76 State-Administered Programs...
Learn more
Financial Management & Budget
75 Direct Grant Programs
75 Direct Grant Programs...
Learn more
Financial Management & Budget
77 Definitions that Apply to Department Regulations
77 Definitions that Apply to Department Regulations...
Learn more
Financial Management & Budget
79 Intergovernmental Review of Department of Education Programs and Activities
79 Intergovernmental Review of Department of Education Programs and Activities...
Learn more
Financial Management & Budget
81 General Education Provisions Act Enforcement
81 General Education Provisions Act Enforcement...
Learn more
Financial Management & Budget
82 New Restrictions on Lobbying
82 New Restrictions on Lobbying...
Learn more
Financial Management & Budget
84 Governmentwide Requirements for Drug-Free Workplace
84 Governmentwide Requirements for Drug-Free Workplace...
Learn more
Financial Management & Budget
86 Drug and Alcohol Abuse Prevention
86 Drug and Alcohol Abuse Prevention...
Learn more

Funding Info

The contents of this website were developed under grant H264L250001 from the U.S. Department of Education (Department). The Department does not mandate or prescribe practices, models, or other activities described or discussed in this document. The contents of this website may contain examples of, adaptations of, and links to resources created and maintained by another public or private organization. The Department does not control or guarantee the accuracy, relevance, timeliness, or completeness of this outside information. The content of this website does not necessarily represent the policy of the Department. This publication is not intended to represent the views or policy of or be an endorsement of any views expressed, or materials provided by any Federal agency (EDGAR 75.620).

Copyright ©2020 Interwork Institute. All rights reserved.
Technology questions: support@vrtac.org
Home