TITLE 44: GOVERNMENTAL CONTRACTS, GRANTMAKING, PROCUREMENT AND PROPERTY MANAGEMENT
SUBTITLE F: GRANTMAKING
CHAPTER I: GOVERNOR'S OFFICE OF MANAGEMENT AND BUDGET
PART 7000 GRANT ACCOUNTABILITY AND TRANSPARENCY ACT
SECTION 7000.120 GOMB ADOPTION OF SUPPLEMENTAL RULES FOR GRANT PAYMENT METHODS
Section 7000.120 GOMB Adoption of Supplemental Rules for Grant Payment Methods
a) Payments to states are governed by the Cash Management Improvement Act and the Treasury-State Agreement (TSA) default procedures codified at 31 CFR 205.
1) State agencies must have implemented, written policies and procedures that comply with the TSA and 2 CFR 200.305. The policies and procedures must be approved by State agency staff responsible for cash draw downs, federal reporting, and the TSA interest calculation. The policies and procedures must ensure:
A) Awardee grant payments conform to the TSA and this Section.
B) Awardee grant payments conform to requirements in 2 CFR 200.305.
C) Awardees have policies and procedures that enable them to conform to the TSA and 2 CFR 200.305.
b) Payments to awardee entities must utilize grant payment methods that minimize the time elapsing between the transfer of funds from the Illinois Office of the Comptroller and the pass-through entity. The disbursement by the awardee may be made by electronic funds transfer, issuance or redemption of checks, warrants, or payment by other means. (See UR section 200.302(b)(6) (Financial management).)
1) Advance Payments.
A) The awardee entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both:
i) written procedures that minimize the time elapsing between the transfer of funds and disbursement by the awardee; and
ii) financial management systems that meet the standards for fund control and accountability as established in UR section 200.302.
B) Advance payments must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the awardee 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 awardee for direct program or project costs and the proportionate share of any allowable indirect costs. The awardee entity must make timely payment to contractors in accordance with the contract provisions.
C) State agencies must implement written policies and procedures documenting their assessment ensuring awardee's written procedures and their financial management systems meet the standards for fund control and requirements in UR section 200.302.
D) State awarding agencies must document the determination that the awardee meets the requirements of advance payments in this subsection (b)(1).
2) Reimbursement. Reimbursement is the preferred method, if the awardee does not meet the requirements in subsection (b)(1). Reimbursement must be utilized when the requirements in subsection (b)(1) cannot be met, when the State awarding agency sets a specific condition per UR section 200.207 (Specific conditions), or when the awardee requests payment by reimbursement. Reimbursement may be used on any grant award for construction, or if the major portion of the construction project is accomplished through private market financing or federal or State loans and the grant award constitutes a minor portion of the project. When the reimbursement method is used, the State awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the State awarding agency or pass-through entity reasonably believes the request to be improper.
3) Working Capital Advances. If the awardee entity cannot meet the criteria for advance payments as stated in subsection (b)(1) and the State awarding agency or pass-through entity has determined that reimbursement is not feasible because the awardee lacks sufficient working capital, the State awarding agency or pass-through entity may provide cash on a working capital advance basis. Under a working capital advance, the State awarding agency or pass-through entity must advance cash payments to the awardee to cover its estimated disbursement needs for an initial period, generally geared to the awardee's disbursing cycle. This would include initial start-up cost and normal monthly grant expense not to exceed two months of monthly grant expenses. Thereafter, the State awarding agency or pass-through entity must reimburse the awardee for its actual cash disbursements.
A) A working capital advance requires the State awarding agency or pass-through entity to provide timely advance payments to awardees in order to meet the awardee's actual cash disbursements.
B) A working capital advance must not be used if the reason for the working capital advance is the unwillingness or inability of the State awarding agency or pass-through entity to provide timely advance payments to the awardee to meet the awardee's actual cash disbursements.
c) State agencies must implement written policies and procedures for each grant payment method utilized by the agency: advance payments, reimbursements and working capital advances. The policies and procedures must be approved by State agency staff responsible for federal and State cash drawdowns and reporting.
d) Standards governing the use of banks and other institutions as depositories of advance payments under awards are as follows:
1) The State awarding agency and pass-through entity must not require separate depository accounts for funds provided to an awardee or establish any eligibility requirements for depositories for funds provided to the awardee. However, the awardee must be able to account for the receipt, obligation and expenditure of funds.
2) Advance payments of federal funds must be deposited and maintained in insured accounts whenever possible.
3) The awardee must maintain advance payments of federal awards in interest-bearing accounts, unless the following apply:
A) The awardee receives less than $120,000 in federal awards per year.
B) The best reasonably available interest-bearing account would not be expected to earn interest in excess of $500 per year.
e) Parameters Regarding Interest Earned
1) Interest earned by the awardee up to $500 per year may be retained by the awardee for administrative expense.
2) Interest earned by the awardee in excess of $500 per year on federal advance payments deposited in interest-bearing accounts must be returned to the State awarding agency in accordance with UR section 200.305(9).
5) Payment Withholding
A) Unless otherwise required by State statute, payments for allowable costs shall not be withheld at any time during the period of performance unless the conditions of Section 7000.80 apply, the awardee is determined to be "not qualified" in accordance with Section 7000.320, or one or more of the following conditions exists:
i) The awardee has failed to comply with the project objectives, State statutes or regulations, or the Grant Agreement; or
ii) The awardee is delinquent in a debt to the State of Illinois (see the Illinois State Collection Act of 1986). Under these conditions, the agency may, upon reasonable notice, inform the awardee that the awardee shall not make payments for obligations incurred after a specified date until the delinquency is corrected or the indebtedness to the State is liquidated.
B) If the grant is suspended and payment is withheld because of the awardee's failure to comply with the Grant Agreement, payment must be released to the awardee upon subsequent compliance. Refer to Section 7000.80 for the Grantee Compliance Enforcement System and the Illinois Stop Payment List.
C) A payment must not be made to an awardee for amounts to be paid to contractors that the awardee retains to assure satisfactory completion of work. The payment shall be made when the awardee actually disburses the withheld funds to the contractors or to escrow accounts established to assure satisfactory completion of work.