Financial Management Workshop for CILs…Regulations and Beyond
IL-NET presentation on May 25-27, 2016
Module 15: Day Two Wrap-Up, Q&A

PAULA MCELWEE: We have a few more questions in our wrap up that we're going to go into.

We have a little bit of time to do that, so I'm going to go into a few of these questions, but as we do, remember, if there's anything else that has occurred to you, write it on a note, put it on the table, we'll revisit this in the morning.

So any of the things that are kind of nagging at you and you're thinking, but, but, how?

It's okay to write that down.

We'll come back around more time and pick those up and we will go through them as a group in a little bit and then make sure you get your questions answered tomorrow.

I hope we've answered some of the pressing questions from yesterday today, and I hope you're feeling like we responded to that.

We just picked up a few more notes, and we're going to cover a few more.

John, I want you to answer this first one.

Where do we get direct instruction about how to set up our QuickBooks to properly track direct and indirect costs?

JOHN HEVERON: Here is a suggestion I would make, now, we can't provide this service, because we're not in any of your areas here but we have a QuickBooks consultant on staff.

A QuickBooks certified adviser and I think we have a certified adviser in the room.

There are a lot of them around the country.

QuickBooks is a very common, popular program, so if that's the program you use, I believe you can go online and look for QuickBooks certified advisers, and let them know what you need to do and let them help you get your QuickBooks restructured.

That's the best way to do it.

There are some training tools, some actually come right with the program.

There are other training tools that you can purchase that aren't too expensive.

But for something like this, a consultant can make the process very efficient and focus on just what you need to do.

PAULA MCELWEE: Another thing we see some centers do is talk to the person who is most expert in their geographic area, and contract with them to come in and help you.

I know Leona has helped with this, I know Maria has helped with this.

There are probably some other people you know in your geographic area, who really get Quickbooks and they have set it up and they seem to have the good reports that you would like to have.

It's a good time for you to collaborate with them, contract with them to come in and help set things up properly for you.

If your past person has not done a good job of setting it up, then you do need to revamp for your next fiscal year so that it's set up, so you can actually use it for all of the things we've been talking about.

If you get both Part C and Part B funds, but you put them together on your PAR, and you treat them as a single cost objective, what do you do when the state comes in and tells you you have to prove that the work was specific to Part B and Part C?

This is that state relationship again, isn't it?

You know, so we, remember what Steven says, Steven says, get prior approval to combine those cost objectives.

So if you want to combine the cost objectives of Part B and Part C, your state and your federal people should know that's what you're doing.

It's certainly allowable.

If you need me to say so on a phone call, I'd be glad to share, we've looked at it and it seems to be working well in some places.

But that may or may not make any difference at all because the state gets to decide, so remember the state can add on requirements, and they do.

And this may be one of them for you.

We're told repeatedly to get clarification and get approval and ask questions from our ACL staff person.

At some point, will that trigger an audit?

(Laughter.) Let me suggest this, if you're asking questions and you're responding with correcting or fixing what you're doing, usually not.

Usually that's exactly what they want to see.

You seek the guidance and you follow through and you make whatever changes that you needed to make.

If they give you advice and you are constantly arguing and saying, well, I'm not going to do that, yeah, you probably are going to trigger an audit.

And if it appears that you're not understanding or if you say to them, oh, my God, I can't do that, they're going that's going to raise concerns, just think about how your demeanor and your questions might raise concerns.

If they raise red flags, I suppose it's possible.

They haven't so far done those compliance audits in most places.

You know, there's a, in Title VII, there's a formula for how they're supposed to be done.

They've been understaffed and the regs aren't out so there's lots of reasons why it hasn't started yet.

It will start back up again and we will see exactly how ACL treats this as opposed to how RSA treated it.

There may be a difference there.

But certainly, If you raise lots of questions and don't appear to be making progress on the responses, it would raise concerns for me.

If it was me, I might say, mmm, maybe we ought to go see.

If you're asking questions and you're making the changes, I would say, oh, good, they're all right, they're following through.

I'm worried about the ones that aren't.

Does that make sense, do you think?

JOHN HEVERON: Absolutely, and speaking as an auditor, financial statement auditor, and a compliance auditor, we really encourage people to ask questions.

It does not ever come as an item of concern for us.

I think sometimes when you're asking a question, you think, I'm the only agency that might have a problem here, and boy it's not true and they know that.

What differentiates you, you've shown that you care about getting the right answer and you're proactive with it, so from our perspective, that wouldn't increase the likelihood that we dig more deeply into an area.

It gives us comfort.

PAULA MCELWEE: The next question is about hey, we're making money on fees-for-service.

Is there any chance that they're going to come back and reduce our Federal award because we have all this money in the bank from the good, you know, management we've done with developing fees?

And I guess the first thing we need to do, that we've kind of worked around, but we haven't actually addressed here, is the issue of program generated income.

So there is an issue of program generated income.

If you are using your Part C money to find and receive other money, then that money is, falls under all the same requirements as your Part C money, and it is technically supposed to be used first.

It's another part of what we were talking about this morning.

So it's technically that income is supposed to be used before you draw down Part C money.

Can you expand with that?

Certainly.

Are you supposed to have it sitting in the bank?

Probably not, if it was program generated income.

However, if you can make a case that this program stood on its own, and you can show that your startup costs were part of your business plan, and it was not taken from your Part C or other federal funds, and it stands on its own, then it's your own project.

So it's real important for you to distinguish and make sure you aren't using staff paid for with Part C funds to actually accomplish the startup of that other business entity, if you want the income from that business entity to be unrestricted and to be available to you so that it won't reduce your Federal award.

I know that probably raised a whole bunch of questions because I'm not sure I said that well.

Do you want to clarify?

JOHN HEVERON: Again, the Federal award is going to be paid for based on your indirect cost rate plan, so you're absolutely right on that, Paula.

You know, you said it properly, because if this is a separate program that carries its own cost, then you are not going to have your funding reduced.

You will be fully funded for your program, direct and indirect costs.

PAULA MCELWEE: We have seen situations where there has been an audit in the past.

Of course, there haven't been a lot of recent ones.

In the past it was determined by the review team, that Part C funds were used to develop the project and therefore they had to decide between continuing the project or letting it be part of the Part C grant.

We have seen that happen.

So you do need to be thoughtful about how your startup costs are happening and make sure you're reporting it properly.

Does that make sense?

Questions?

AUDIENCE MEMBER: Paula, can you just clarify, program income what you said is, I spend a lot of time with program income but what you said about it being additive, yes.

But I thought that program income just needed to be expended within one year of the time it was earned but what I heard you say it needed to be expended prior to the draw down, so what did I miss?

PAULA MCELWEE: It is actually the requirement that has not been enforced, but that is actually a requirement, that you spend it first.

We think that it's not being enforced because fund development is a required activity, and there's an expectation that you do it and therefore they're being very flexible with how you proceed with that.

And by the way, writing a grant doesn't count as actually, you know being the Executive Director's efforts in writing grants would not necessarily be a startup cost.

The startup costs would be all of your indirect costs and your actual costs for staff and space and supplies and so forth.

That would all have to be free standing for it not to fall under these restrictions, and you're right, they haven't enforced that yet.

That doesn't mean they won't at some point so you need to be aware of what it actually says.

JOHN HEVERON: Paula, just to add to that because I think this addresses one of the other questions we have, grant seeking, you know, seeking federal funding is not fundraising.

It's an administrative cost.

So when you're doing your allocation, that doesn't fall into fundraising.

It falls into administration.

And that's better.

PAULA MCELWEE: That doesn't restrict those funds as much.

AUDIENCE MEMBER: In Tennessee when they gave Social Security money to the centers, we had to use it, and we could not pull down any of our Part C money.

It came with the same strings tied to it.

Because it was program money.

And the whole time we were using it they gave each center $200,000, but the time we had that money we could not pull down any of our Part C funding during that time so we had to try to burn through that money quickly instead of maybe being able to use it effectively as we could have if we could have had it long period of time.

PAULA MCELWEE: So that is a case where they applied that requirement and you were not allowed to draw down.

AUDIENCE MEMBER: It wasn't program money that we developed, it was program money the state developed but they let that money sit in an account, not wanting, the state didn't want to use it, so they gave it to us and it came with the same strings attached.

PAULA MCELWEE: That is actually what the regulations require.

Like I said, we haven't seen where it's been actually, I guess now we have.

Where it's actually been imposed, within our group.

So, other questions around program generated income?

Had a question here someone about the consumer control requirement regarding documentation of, for management staff who, to show they have a disability.

The question is, does it have to be significant, and have to be visible, and the answer is no.

The only consumer control element that is required to be a significant disability is the 51% of your board, so that's, the 51% of staff and 51% of management indicated disability but doesn't specify a significant disability in those cases.

Disability is not required to be visible.

And it is self disclosed, and I've had some long, you know, I'm old.

I've been around this business for a while.

See these gray hairs, and I remember this conversation when it first came out about how do we prove that people have a disability when we're saying we're consumer-controlled?

How do we show that?

I remember the argument and we were very intentional when we said it will be self disclosed.

It will not be required that you prove it in any other way.

It is a self disclosed disability.

We had many reasons for doing that, but one of the strongest ones was, we didn't want to find ourselves in a medical model with a diagnosis required in order to say, yes, you have a disability.

So self disclosure was the, you know, the name of the game, and has been all along.

Now, there is right now a lot of conversation around the issue of should it be a visible disability?

And I will tell you my own personal bias on that.

I think if you don't have at least a good share of the people with disabilities in your center, people with visible disabilities, you lose that same thing that Mike was talking about earlier today, which is do you have the examples within your center to the community and the other consumers that, hey, people with disabilities are here and they're successful and they're running this place and this is a consumer controlled situation.

If you're not willing to publicly say that you have an invisible disability, my bias is then you're, you really haven't bought into the disability movement at this point in time.

You know.

The point at which you say, yes, I have a disability, I'm proud to say that I'm a part of the consumer control movement, then that's how we came to this, right?

But it's self disclosed.

I can't decide for you that you have a disability.

If you come to me and you want services at a center, and I ask you, do you have a significant disability, as the people served also have to have significant disability and you say no, then I say, I'm sorry, I can't serve you.

Because that is the requirement.

You have self disclosed.

Once you explain that, you might change your mind.

But that is who serve, is people who self disclose a significant disability.

AUDIENCE MEMBER: Speaking how to document that, I'm a SILC, not a center, but we have a form that we have board members fill out every year that we tell them is totally optional.

We call it our demographics form.

It's on a different color of paper and we ask things about where they live and what Congressional district they're in, if they have a disability, what it is.

If they have a family member with a disability.

What their ethnicity is, so that we can show our statewideness, our cross-disability, our diversity, and that is how we give them an opportunity to self disclose disability, and we just take them at their word.

PAULA MCELWEE: Centers can do the same thing with boards but you can't ask those same questions of people that you're interviewing for employment.

There's a whole nother set of things that you're not allowed to ask of an employee.

What I always tell people to do, maybe I've said this already this weekend, I can't remember, I always say, ask what their experience with disability is.

If they know who you are and what you do, they'll tell you the rest of the story because they know it's to their advantage to say they have a disability.

Give them every opportunity but you can't ask the question when it's an employee.

AUDIENCE MEMBER: I’ve been doing this job for almost 20 years and for the very first time this year, when we sent out applications for people to apply for potential nomination to be on the council, I had a few people who would not disclose what their disability was.

They would mark that they had a disability, which is optional information on our form.

But they wouldn't tell what it was.

One person said it was a hidden disability, and one person said they weren't going to put it down but they would tell us if we talked to them personally.

PAULA MCELWEE: Well, actually the requirement doesn't say they have to say what the disability is.

It just says self, we're trying to get diversity.

I think it does tell you that they are still feeling the stigma of whatever that disability is.

They are facing that stigma in some other place.

Maybe they're worried about their employer seeing this, the article that comes out with the SILC and they don't want the employer to know they have a mental health disability.

So there's still a lot of stigma around some disabilities, and I don't, that's not an excuse, but I think we need to be aware of that, and if people aren't willing to do it, we need to continue to help them come along on that.

An employee is contracted not salaried provides services is only pay based on incomes, but is paid with federal money.

Is a PAR required?

JOHN HEVERON: Well, it's always an area of concern between employees and independent contractors.

We're not going to go there.

That wasn't really the question.

The question states that an employee is contracted.

So I take that to mean outside services.

And if it's an outside service person that is working in a single area, you just follow the rules for your Cost Allocation Plan, which state whatever area this service product, product or service benefits, it's charged to that area.

PAULA MCELWEE: I think they're talking about an employee who is not required to keep time records, in general.

So they have a contract as an employee, but they're still an employee, they still pay the Social Security for them.

But they're saying, you know – 

JOHN HEVERON: If they're an employee, then they need a PAR.

If they're an employee, they need a PAR.

PAULA MCELWEE: If they're truly a contractor without Social Security and other benefits paid, then they would not need a PAR.

Why did you divide the indirect cost by the direct costs to get the indirect cost rate instead of dividing it by the total?

JOHN HEVERON: Well, maybe that question came up before I showed that illustration, but the illustration, I think, explains once you get the, all of the components of direct cost, you just add on that percentage of her indirect costs, so dividing the indirect by the direct, not by the total, gives us the add on number.

Now, we could probably figure it out doing it differently but that's really the easiest way, and most of the Federal agencies, including HHS, their examples do it that way.

PAULA MCELWEE: This is the last question in our stack of questions here.

If you have not heard yet whether your indirect cost rate is approved, at what point is the last date to give them before you reach out?

Well, here's your reality.

You have to have that indirect cost rate to do your application for your funds that will begin October 1.

That application, Bob said this morning, is probably going to be out in the next couple of weeks.

It's probably going to be due from you shortly after that.

So when we looked at what would make a good date for you to have your indirect cost rate proposal in, we said March 31 because that gave them April, May, June, that three months which is what they said it took, 90 days, to approve it, and you'd be okay for your application going into your next fiscal year.

So if you haven't seen it within 60 days of when you submitted it, I would reach out, I think, because in a couple of weeks, you're going to get the application, you're going to want to put it in your budget and on your forms and you're only going to have a few weeks to do that, so you're getting close to that point now, I would say.

All right.

Other questions?

Got a couple here.

AUDIENCE MEMBER: This is about consumer files.

Can they be kept totally electronic, including the signature pages, everything can be electronic?

No paper files anymore?

PAULA MCELWEE: Yes.

Now you have to scan in any signatures, so you'll have to scan in the signed documents.

Signed documents would include certification they have a significant disability and their choice to either have or waive a plan.

Those have to be signed.

Have to sign receipt of all the legal things you give them.

Often that's done in checklist format, but they'd have to be scanned back in with actual signature on them or you have arrangement to make electronic signature.

Oh, that was your question, okay.

AUDIENCE MEMBER: So like I said, I went through this last year, and after a few weeks, I did call and they, or I did e-mail and told me who the assigned person was.

I called him up and he said no, never heard of you.

And he started looking through and found me, he said, oh, we can do that.

A couple of questions.

Just call them.

I think it makes you sort of rise to the top.

What I found interesting it was June when he finally approved it and he said, that means this is good for 90 days earlier, which means I'm going to really say that your indirect rate is approved from April 1.

So my accountant did something with that, because only half year, obviously, and I frankly could never quite figure out how she said she was going to handle it.

She said, oh, that's fine.

PAULA MCELWEE: Okay.

It's a provisional rate, and you are required to give some reporting back on how it worked.

And we will do some training on that.

We're kind of crossing one bridge at a time here.