ED Issues FAQ on 2024 Uniform Guidance Revisions
The Department of Education (ED) recently issued a Frequently Asked Questions (FAQ) document addressing 16 common questions related to the Office of Management and Budget’s (OMB) April 2024 revisions to the uniform guidance (2 C.F.R. Part 200), particularly in the context of ED-funded programs.
Within the FAQ, ED refers to grant recipients as either “recipients” or “grantees,” and subrecipients as either “subrecipients” or “subgrantees,” to align with ED regulations under the Education Department General Administrative Regulations (EDGAR) at 34 C.F.R. §77.1.
The FAQ encourages discretionary grantees and subgrantees to “review the revised uniform guidance thoroughly, update their internal policies and procedures accordingly, train relevant staff, and ensure their financial and administrative systems are compliant with the new requirements.” It notes that the uniform guidance applies to ED discretionary grants, as well as state-administered formula grants (e.g., Title I of the Elementary and Secondary Education Act (ESEA) and Individuals with Disabilities Education Act (IDEA) grants) and direct formula grants (e.g., Higher Education Emergency Relief Fund awards).
Effective Date
When issuing the 2024 uniform guidance revisions on April 22, OMB explained that the revisions would become effective for new awards or modifications to existing awards as of Oct. 1, although federal agencies could elect to implement them as early as June 21. The ED FAQ states that an ED discretionary grant with a performance period start date on or after Oct. 1, or a discretionary grant continuation issued on or after that date, must implement the revised uniform guidance effective Oct. 1. A direct formula grant made on or after Oct. 1 must implement the revised uniform guidance. Front-loaded discretionary grant awards (i.e., those in which “partial or full funding for out years of the grant is either provided in the initial award of the grant or the award of a noncompeting continuation”) can use the guidance in the 2024 revisions as of Oct.1.
However, recipients of fiscal year 2024 state-administered formula grants issued on or after July 1 can implement the revised guidance effective on July 1 provided that they have revised any applicable state policies and procedures with changes from the 2024 uniform guidance. Recipients of carry-over funds from state-administered formula grants also can implement the revised guidance effective July 1, provided that the state has updated any applicable state policies and procedures.
The FAQ explains that the revised guidance defines equipment as tangible personal property with a unit cost of $10,000 (up from $5,000 in the current uniform guidance), or the capitalization level provided by the federal grant recipient’s or subrecipient’s own policies, whichever is lower (§200.1). ED stresses that all grantees and subgrantees seeking to use the higher $10,000 threshold for equipment will need to revise their policies to reflect the higher capitalization level. After doing so, the grantee or subgrantee will not need to make further changes to its threshold for supplies because the definition for supplies at §200.1 cross-references the definition of equipment.
In another question, the FAQ reiterates that state-administered formula grant recipients seeking to implement the uniform guidance early must modify their policies to increase the capitalization threshold for equipment to $10,000 in order to apply this new threshold for equipment requests. In addition, grantees of state-administered grants that want to charge indirect costs must comply with the thresholds in their current indirect cost rate agreements issued by their cognizant agency (34 C.F.R. §76.564(b)). They may not use the new indirect cost thresholds in the revised guidance until they negotiate a new approved indirect cost rate.
De Minimis Rate
The 2024 revisions to the uniform guidance raised the de minimis indirect cost rate from the current 10% of modified total direct costs to up to 15% (§200.414). In response to a question asking how this change affects discretionary grant applicants who submitted their proposals this year, the FAQ states that an applicant that does not have an approved indirect cost rate agreement with a cognizant federal agency, and that does not have an award that requires a restricted or training indirect cost rate, may elect the 10% de minimis rate for awards with project periods beginning before Oct. 1. For awards with project periods beginning on or after Oct. 1, the applicant may elect the de minimis rate of up to 15%. Discretionary grantees that received awards for projects that start on Oct. 1, but only proposed a 10% de minimis rate in their approved application, must work with their program office to obtain a revised budget approval allowing them to claim the 15% rate, “which may not be granted if it alters the scope and objectives of their project.”
Applicants and/or grantees who do not qualify for the 8% indirect cost rates for restricted awards (34 C.F.R. §76.564(c)) or training awards (34 C.F.R. §75.562(c)) must use a temporary rate of 10% budgeted direct salaries and wages (34 C.F.R. §75.560(c)) while the applicant pursues a negotiated indirect cost rate.
The FAQ touches on other key changes in the 2024 revisions to the uniform guidance. It notes that OMB clarifies at §200.455 that grantees may use funds for costs related to integrated data systems and evaluations as long as the costs are reasonable, allocable, allowable and necessary. In addition, the 2024 revisions state at §§200.407 and 200.456 that federal grant recipients no longer need to obtain prior approval to charge participant support costs as direct costs to federal funds. ED also reminds grantees that the single audit threshold in subpart F has been increased from $750,000 in federal funds expended annually to $1 million, and the criteria for selecting major programs for audits has been updated to better focus on higher-risk areas (§200.501).
For More Information
The ED FAQ is available at https://www.thompsongrants.com/sites/grants/files/advisory_files/uniformguidancefaqs.pdf.
