Four Ways Asset Management Can Help With Your Federal Grant Money
Public schools are funded primarily by state and local government (approximately 40-50 percent of the total); mostly through local property taxes. Although the federal government's contribution may seem small in comparison (nine to 10 percent), it's a significant amount for some districts — money that, if lost, would have far-reaching, negative consequences. With public demand for government spending transparency, federal oversight and auditing of monetary contributions — a significant amount of tracking is required.
What does that mean for financially struggling schools? Accounting for every penny — how it's spent and what it's spent on. Schools using outdated methods for tracking purchased items, such as pen and paper or Excel, are spending too much time and money on a system that is labor intensive, difficult to reconcile and difficult to demonstrate compliance. Many schools are turning to an asset management solution, an inexpensive software tool for tracking equipment purchased through federal grants.
The federal government requires any item purchased with grant money to be tracked, maintained and disposed of appropriately. An asset management solution gives schools the necessary tool for recording each step of the tracking process and ensures detailed documentation for compliance auditing. Here are four ways that an asset management solution can assist schools with handling grant money.
1. Manage Funding
For the fiscal year of 2013, a five percent cut to federal programs meant a budget cut of roughly $727 million — that's 50,000/$1 million of federal aid to public school districts. With many school districts already facing significant state and local budget cuts, these federal cuts have significant consequences that include laying-off teachers/staff, ending extracurricular activities, increasing class sizes, cutting elective programs and even closing schools.
If your school's budget is already incredibly tight and you find it difficult to purchase needed items, it may seem counterintuitive to spend more money. However, an asset management solution is an investment that may quickly pay off. Keeping track of purchased items and recording performed maintenance allows you to utilize assets longer, and it's required when using federal grant money.
2. Establish Accountability
Equipment purchased with grant money must be used for the program or project awarded the funds. Once that program or project ends, the equipment can then be used for other purposes. In addition, there are specific management requirements for this equipment:
- Property Records. Records must be maintained (in some cases for several years) and include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, the cost of the property, percentage of Federal participation in the cost, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price.
- Control System. A control system must be developed to ensure adequate safeguards to prevent loss, damage or theft of the property. Any loss, damage or theft will be investigated.
- Physical Inventories. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.
- Adequate Maintenance of Equipment. Adequate maintenance procedures must be developed to keep the property in good condition.
- Disposition of Equipment. When original or replacement equipment acquired under a grant is no longer needed, disposition of the equipment will be made as follows:
(1) Items of equipment with a current per-unit fair market value of less than $5,000 may be retained, sold or otherwise disposed of with no further obligation.
(2) Items of equipment with a current per unit fair market value in excess of $5,000 may be retained or sold and the awarding agency shall have a right to an amount calculated by multiplying the current market value or proceeds from sale by the awarding agency's share of the equipment.
Keeping track of these requirements manually, places your school in a financially precarious position. At any time, the Federal government has the right to audit for grant compliance. An asset management solution will track each step of the process and provide the desired evidence — meaning you will not be asked to return awarded funds.
3. Avoid Forced Repayment
Many school districts have been required to return misspent or improperly accounted for grant money. The following districts were audited, found to be in a state of non-compliance, and, for two of the districts, required to repay money — money already spent.
What is the result of forced repayment? Taking money allocated for future expenses to pay for items and services already purchased or used. This practice is clearly not in the best interest of school districts or their students. The following are just a few, recent examples of districts in non-compliance.
- Maryland. An audit conducted by the Office of the Inspector General for the U.S. Department of Education found misuse of federal stimulus and Title 1 funding by Baltimore City and Prince George's County schools. If the findings in both jurisdictions hold, the state may have to pay back $540,013 to the federal government.
- New Jersey. In July of 2012, the New Jersey Department of Education audited Newark's public schools. The district's use of two grant awards, totaling $24,392,379, was specifically reviewed. One of the findings highlighted the inappropriate tracking of purchased equipment. The equipment did not display appropriate labeling and did not indicate the purchase was made with federal funds. To be compliant, the school was required to appropriately and accurately label each item with a visible inventory number and a visible serial number.
- Texas. An investigation completed by Dallas ISD's Office of Professional Responsibility claims Roosevelt High School Principal Dr. Leicha Shaver mismanaged thousands of dollars in Texas Title 1 Priority Schools grant funds. The report states Shaver spent $200,000 of grant funds on an award ceremony; spending deemed "unallowable" according to the Texas Education Agency. The district is currently reviewing what funds need to be reimbursed to the grant foundation.
4. Tracking Saves Money
Learn from the experiences in Maryland, New Jersey and Texas. An asset management solution easily solves the issues detailed above by providing you a tool guaranteed to meet all federal guidelines and requirements — ensuring your school and your students don't lose money.
One Example of Success. Houston ISD sought to improve their fixed-asset tracking and to streamline their time-consuming audit process. They purchased an asset management solution that included a mobile device and barcode printer. By employing the solution, the district eliminated their manual tracking process — a process full of inaccuracy, missed deadlines and unnecessary replacement of misplaced items. They've seen a 75-percent reduction in time spent auditing equipment, and they have the ability to track each and every dollar. Now, Houston ISD spends their allocated funds on new equipment instead of replacing lost items.
Brian Sutter is the director of Marketing at Wasp Barcode Technologies. He can be reached through www.waspbarcode.com.