PROCESS & POLICY
| Q.1 | Are the cost allocation plans for the Year 1 MOUs going to be considered "hold harmless"? |
| A.1 | Partners should be careful about considering the reconciliation of the Year 1 MOU as "hold harmless". USDOL/ETA indicated at the TAG training sessions that they're viewing year 1 as a learning year. WD&T is looking at it similarly. The partners should be cautioned, however, that the costs in question have been paid with federal dollars and are subject to a Single Audit. There is no guarantee that their Single Auditors may not disallow costs if OMB cost requirements have not been met.
The partners still need to attempt to complete the reconciliation process so they can find out what worked and what didn't work. Informed decisions regarding the Year 2 MOU can be made only if a proper analysis of Year 1 activities (including the cost allocation plan) has been conducted. Also, if the partners decide that they won't make cash payments between each other to balance the over and under contributions, they better ensure they get full partner agreement on this issue. Some partners who paid for more than their allocable share may not be so willing to view year 1 as "hold harmless". |
| Q.2 | We have reached agreement on our MOU with most of our partners, but have reached a dead-end in negotiation with a few certain partners. How should we deal with this situation? |
| A.2 | Before impasse is declared in a local area, the partners must be vigilant in ensuring that the recommended MOU development guidance has been followed. Local areas should ensure that the MOU development process has truly been a collaborative effort and reflects full partner involvement. Partners should identify the areas of contention and see if all the partners fully understand the issues and have followed prescribed guidance relative to these issues. We strongly recommend that you re-visit the MOU Toolkit and the Resource Sharing Toolkit to help you identify and resolve issues of contention.
If impasse has truly been reached then the LWIB and partners should document their efforts to reach agreement. Then the locality should report the impasse to the Director of WD&T. WD&T on behalf of NYSDOL is the entity designated as the administrative entity for WIA. WD&T will then identify and designate an appropriate and impartial party to mediate the situation in an attempt to bring about a successful MOU negotiation. |
| Q.3 | If you have an impasse situation and you go through the formal process and remove a partner, can your One-Stop still get certified by the state? |
| A.3 | As far as state certification, if a mandated partner was removed because they couldn't get an agreement on the MOU, then all of the required partners would not be represented in the MOU and this would not meet the state quality standards. |
| Q.4 | Are MOUs title specific? I work for a school district, and last year SED signed the MOU for all Title II partners. In light of this, as a Title II provider, do I have to be involved in the MOU discussions? |
| A.4 | SED needs to be the signatory because they are the grant recipient. The local partner, which represents a consortium, would need to be involved in the discussion because it is not just a cost issue but an agreement of how services/referrals etc. will be delivered. |
| Q.5 | We have been informed that WD&T won’t review 2nd year MOUs until the MOUs have been signed by all the partners. Why does the review process require that all local partners must sign the MOU before the review takes place? |
| A.5 | WD&T’s responsibilities in the MOU process are to provide oversight and technical assistance. In order to maintain our ability to provide independent and objective oversight of the MOU process, WD&T will not be involved in any aspect of the specific negotiation of the MOU and its cost elements. It is the responsibility of the local partners to negotiate and enter into the MOU and to ensure that partners fairly share in the costs of the One-Stop system. Keeping in mind that the MOU should be a locally driven product and should reflect the partner’s vision for a workforce development system in their local area, WD&T’s goal in providing technical assistance prior to finalization of the MOU will be to identify if the methodologies developed and agreed to by the partners are consistent with federal and state cost requirements and to provide guidance to help the partners identify and resolve problem areas.
At the point that the MOU is agreed upon and signed by all the partners, WD&T will review the MOU to ensure that it contains all of the required elements and will review the cost allocation and resource sharing plans to ensure they are reasonable and in compliance with applicable federal/state cost requirements. |
| DETERMINING SHARED COSTS | |
| Q.1 | It is easy to identify and have consensus on some shared services such as a greeter in the staffing pool. However, as you move to other administrative staff members, such as payroll and accounting functions, the distinction becomes fuzzy. Where do you draw the line in such a continuum? |
| A.1 | It all depends on what the partners negotiate and agree to. It would certainly seem appropriate to consider identifying as shared costs the costs of One-Stop Management such as One-Stop Directors or the Fiscal Manager who have been designated to provide services to the One-Stop system partners (to the extent they provide services that benefit multiple partners in the system). Any of the arrangements agreed to by the partners should be spelled out in the One-Stop Operator agreement. However, beyond these types of One-Stop management costs, the partners may want to carefully consider whether they should include as shared system costs each partners support costs of such items as payroll and accounting functions. These would appear to generally be costs that directly benefit the respective partners. As such they should not be included as shared system costs. |
| Q.2 | Are you saying partners develop a rationale for their shared costs, but another area might go through the same process and decide similar costs are not shared? |
| A.2 | Yes, that certainly could be the case. Depending on how the particular One-Stop systems have been structured, a particular cost may be viewed as a direct cost in one LWIA and that same cost may be viewed as a shared cost in another LWIA. The definition of what is and what isn’t a shared system cost isn’t something that can be standardized or pre-determined.
It seems that, in general, many of the Year 1 cost allocation plans contained a substantial level of costs that really were direct partner costs and did not fit the TAG’s definition of shared system costs. As a result, the total pool of costs that was allocated to the partners was inflated and made the application of appropriate allocation methodologies very difficult. We recommend that LWIA follow the steps detailed in Chapter I-1 of the TAG to help them identify shared costs for the One-Stop system that exists in their local area. |
| Q.3 | Can there be ancillary agreements outside the MOU to cover rent/utilities for partners’ direct costs? |
| A.3 | Yes. Depending on the circumstances, it may be more appropriate to deal with the issue of direct rent costs outside of the partner MOU. There were areas in the state where the failure to agree on rent issues caused real problems in negotiating the MOU in Year 1. If the negotiation of how to handle sticky rent issues is removed from the MOU discussion and handled in separate ancillary agreements, it may be easier to focus on the true shared costs of the system. Removing these direct costs from the cost allocation plan will reduce the total amount of costs that need to be discussed, negotiated and allocated, thereby serving to make the allocation process easier. Another practical reason to handle direct rental costs outside of the MOU is because the partner who owns the property will incur a substantial outlay of funds for the operation and maintenance of the property and perhaps cannot afford to wait until the end of the MOU period to be paid for the partner’s rental fees. |
| Q.4 | Can partners outside the center be charged for shared costs - even if they are not located there? |
| A.4 | As described in Chapter I-5 of the TAG shared costs are defined as those costs of the One-Stop center or system that benefit multiple partners and are incurred in support of the services delivered through the One-Stop system. The first step in determining whether a partner inside or outside the center should be charged for a cost is to look at the nature and the functionality of the cost in question. For example, portions of WIB costs or marketing costs could be viewed as either direct costs or shared costs depending on the functionality of the specific costs in question and which partners benefited from the costs. The portion of these types of costs that are determined to be shared system costs could certainly be seen as benefiting partners both inside and outside of the center. The test of whether a partner should be allocated any portion of a given system cost depends on whether the partner benefited from the cost, and not on where the partner is located.
Shared services costs such as intake or case management could also be seen as benefiting partners both inside and outside of the center. The partners would need to examine the specific service provided and determine which partners benefit from the incurrence of the cost. For example, if the only partners that benefit from the intake services provided at the One-stop Center are those partners located there then only those partners should share in the cost. Conversely, if those intake services benefit partners regardless of where they are located then all the benefiting partners should be allocated their fair share of the costs. Shared center costs must be looked at in the same way - who benefits from the cost that is incurred? Some of the center costs will be viewed as directly benefiting the partners that are located there and should be directly charged to those benefiting partners. However, there may be costs at the center that benefit partners both inside and outside the center. Resource room costs may be an example of this. Also, the space occupied by intake staff that provides services to partners both inside and outside the center would represent center costs that should also be viewed as a shared cost that would be allocated to all benefiting partners regardless of where they are located. The TAG instructs partners to develop a preliminary list of shared costs based on the service delivery model that was developed and agreed to by all the partners. Then the partners should begin the process of identifying how the costs are of benefit to each of the partner programs (as illustrated above). This should be done through the development of function and benefit statements for each cost item or group of costs. The function and benefit statements provide each partner an understanding of how the shared costs will benefit its particular program. As illustrated above, not all shared costs will benefit all partners. |
| Q.5 | When partners discuss shared costs, is it your understanding that these discussions should relate only to the provision of core services, not intensive or training services? |
| A.5 | The level of integration and the design of the local One-Stop system will have a major impact on the type and amount of shared costs that exist in the system. In general, the shared service costs of the system will relate to the provision of core services. Usually, participants that receive intensive or training services have been enrolled in a particular program and the related costs should be charged as direct costs to that program. However, it’s possible that as the level of integration increases, there may be circumstances where it may be appropriate for certain partners to develop systems whereby intensive or training costs may be shared and the participant who receives these services is enrolled in multiple programs. |
| Q.6 | When you have a program that serves a universal population, isn’t it difficult to distinguish direct costs from shared costs? |
| A.6 | In determining if any cost is a shared cost or a direct cost, the partners need to see if it meets the TAG’s definition of a shared cost; Is it a cost of the One-Stop center or system that benefits multiple partners and is incurred in support of the services delivered through the One-Stop system? Shared costs are generally costs incurred by one of the partners that results in cost avoidance for one or more of the other partners in the one stop system. This means that since one partner is providing a certain service or covering a particular cost, that another partner now can avoid providing that same service or incurring that same cost. The fact that program services are provided to a universal population should not be the deciding factor in cost allocation. Partners need to develop a system that recognizes that funds are provided to various partner programs to provide services. Therefore, the cost allocation back to each funding source needs to reflect benefits being received by the participants in the One-Stop system.
For example, let’s assume that the LWIA partners agree to designate Partner A to provide common intake services within the One-Stop system. Let’s also assume that that partner administers programs that traditionally have served a universal population. The cost of the traditional program services that Partner A continues to provide outside of the one-Stop system would generally be considered a direct cost of those programs and would not be put into the pool of shared costs to be allocated among the partners. The costs that Partner A incurs to provide the common intake services for the One-Stop system would be considered a shared cost since it benefits multiple partners and is incurred in support of services delivered through the One-Stop system. The cost for providing the common intake services also resulted in cost avoidance for other partners because those partners now do not have to incur costs to provide that same intake function. |
| Q.7 | Do WIB costs represent shared system costs? |
| A.7 | WIB costs can be considered shared system costs to the extent that the WIB carries out functions that support the overall system. This could include the costs that the WIB incurs to provide business services that benefit multiple partners. The costs associated with the portion of WIB time spent providing direction and/or oversight to a particular program should be charged as direct costs to that program.
Partners need to document their basis for determining how much of the WIB’s costs represents shared system costs and how much represents direct program costs. Partners should be aware of possible firewall issues in assigning WIA program duties to the WIB. |
| Q.8 | What are affiliate sites and how do we address the issue of the costs of these affiliate sites in our cost allocation plan? |
| A.8 | The WIA legislation defines the One-Stop system as consisting of one or more comprehensive, physical One-Stop centers in a local area that provides the core services specified in WIA sec. 134(d)(2) and that provide access to the other activities and programs provided under WIA and by each One-Stop partner. In addition to the comprehensive centers, the regulation notes that WIA allows for three other arrangements to supplement the comprehensive center(s). These supplemental arrangements include: (1) a network of affiliated sites that provide one or more of the programs, services and activities of the partners; (2) a network of One-Stop partners through which the partners provide services linked to an affiliated site and through which all individuals are provided information on the availability of core services in the local area; and (3) specialized centers that address specific needs.
The establishment of One-Stop centers and the identification of affiliated sites are locally negotiated decisions that should flow from the strategies outlined in the One-Stop System Building toolkit. The first four strategies detailed in this toolkit are: (1) Determine the needs of individual customers and business customers; (2) Define the vision, mission, values and goals of your local One-Stop system - the WIB helps define and shape this vision; (3) Develop your plan for the delivery of all One-Stop services; and (4) Develop the list of partners to provide each service. By working through these strategies in a collaborative fashion, the partners will be able to identify their One-Stop centers and their affiliated sites. Then the partners can begin to define the actual costs of operating the local system. The partners then must identify the shared costs of the entire system that will include the shared costs of any affiliated sites that have been designated by the partners. Allocation methodologies would then be developed to determine the bases for allocating these shared costs among the benefiting partners. Chapter 3 of the TAG identifies several allocation methodologies and strategies that maybe used. It is important to keep in mind that the cost allocation plan and the resource sharing plan are fiscal documents that are an integral part of the MOU and are developed in support of partners’ vision and plan for delivering services in the One-Stop system. Since the cost allocation and resource sharing plans are fiscal documents, it is critical that the partners involve staff with fiscal expertise in the development of these documents. The partner agencies should designate fiscal staff with a working knowledge of their program funding and operations to work with the program staff to identify, value and negotiate the shared costs and to choose allocation methodologies that are appropriate and consistent with federal cost guidelines. |
| Q.9 | Should the services provided by partner agencies that serve a special population such as Job Corp or VESID be considered as shared system costs? |
| A.9 | If a partner like VESID provides a service to a particular population as part of their funding mandate and this service is what they've always done, there's a good chance that that cost is a direct cost and should not be allocated to the other partners. In determining whether a cost is shared cost or a direct cost the partners should be asking, "what new services are we providing as a result of this new one-stop environment - did we as partners provide any common or integrated services?" To the extent that they have partnered to provide common or integrated services then those are the services around which they should be trying to define shared costs.
It needs to be re-emphasized that the reforms embodied in the Workforce Investment Act are pivotal and not "business as usual". The legislation is not simply about co-location of partner programs; it is about integration and the development of true partnerships and honest collaboration at all levels and among all stakeholders. It is expected that programs and providers will not only co-locate, but that they will coordinate and integrate services, activities and information, so that the system as a whole is coherent and accessible for individuals and businesses alike. |
| CONCEPT OF BENEFIT RECEIVED | |
| Q.1 | How do you define "benefit" since it is critical to determining shared costs? Examples? |
| A.1 | Benefit received can be defined as cost avoidance (whereby one partner is providing a certain service or covering a particular cost so that another partner now can avoid providing that same service or incurring that same cost) or enhanced services provided to program participants that lead to meeting program goals. It is up to the partners to make judgments as to whether or not they received benefit from a certain item of cost or pool of costs. Chapter 1-3 of the Federal TAG states that, "using a preliminary list of shared costs, partners should then begin the process of identifying how the costs are of benefit to each of the partner programs. This is done through the development of function and benefit statements for each cost item or group of costs." The measure of the benefit is based on the value or worth of the expense to each partner.
The TAG describes a variety of methods that may be used to measure the benefit received by each partner. Cost allocation is the process of choosing methodologies that will measure the level of benefit received by the partners in the One-Stop system. Measuring benefit is the critical requirement and central task to be performed in allocating costs. Benefit received is usually expressed through the application of a mathematical formula to a cost pool, resulting in a distribution of the cost to a number of final objectives. |
| Q.2 | Are there situations where certain partners might not get allocated any portion of the shared One-Stop system costs? |
| A.2 | The WIA legislation requires that all partners use a portion of their funds to create and maintain the One-Stop delivery system. However, it is important to recognize that costs are allocable to a particular program only to the extent of benefits received by that partner program. Likewise, costs that do not benefit a particular program are not allocable to and cannot be charged to that program. Therefore, while it is possible that there may be circumstances where a particular partner is deemed not to benefit from any of the shared system costs, we would expect this would be the exception rather than the rule. If this were determined to be the case, we would have to question whether this partner was truly participating in good faith in the development of the local One-Stop system. |
| Q.3 | Must there be a direct correlation between benefit received and the allocation base? |
| A.3 | The OMB standard is that costs must be allocated in reasonable proportion to the relative benefits received. An allocation base is acceptable if it represents a fair measure of cost benefit and if it results in an equitable distribution of the costs of services rendered or goods provided. The base used should be as causally related as possible to the types of costs being allocated so that benefit can be measured as accurately as possible. |
| COST ALLOCATION & RESOURCE SHARING METHODOLOGIES | |
| Q.1 | The cost allocation plan we have developed identifies the resources we will need to establish and operate our system and we have identified what each partner is willing to contribute to our One-Stop system. Why do we need to go further? Doesn’t this meet the WIA requirements? |
| A.1 | No, it is not sufficient to simply identify the resources needed for the system and to identify what each partner is willing to contribute. The vast majority of One-Stop partners are recipients of Federal grant dollars, either directly or from another recipient and, as such, must adhere to relevant OMB guidelines regarding cost principles and are subject to A-133 Single Audits.
The A-133 Compliance Supplement identifies the specific compliance requirements relative to the allowability of costs. This document contains detailed requirements relating to cost allocation that the Federal Office of Management and Budget expects your Single Auditors to use when auditing your financial statements under the Single Audit Act. When individual organizations partner in the One-Stop environment, some activities and functions benefit more than one individual organization or funding source. As such, the cost of performing these functions or activities must be allocated to the benefiting programs or cost objectives (grant). This must be done based on benefits received by the benefiting program, and not on availability of funds. Whatever allocation methodology is used, it must be supported by actual cost data. Further, the methodology must not permit shifting of costs that are not allocable or do not benefit a specific program to said program. Under no circumstances may any partner program pay more than its total allocable share of total allowable costs. Therefore, cost allocation plans and resource sharing agreements must be developed to ensure that the costs reported to each partner’s respective federal funding sources conform to OMB guidelines. These principles were amplified in the TAG and the Federal Register on Resource Sharing in the One-Stop systems. |
| Q.2 | The WIA regulations require that each partner must contribute a "fair share" of operating costs of the One-Stop delivery system proportionate to the use of the system by individuals attributable to the partner’s program. Does this mean that we have to use participant numbers as a basis for our allocation methodologies? |
| A.2 | No, this requirement is intended to establish an equitable principle, but it is not intended to prescribe a single method for allocating costs. The regulation goes on to say that there are a number of methods, consistent with the relevant OMB circulars that may be used for allocation costs among the partners.
While using participant numbers as a basis for allocation may be an acceptable methodology for certain costs (such as resource room costs), there are issues that should be strongly considered before adopting this methodology.
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| Q.3 | Certain partners had a problem allocating shared costs based on the number of clients/participants. Has that been resolved? |
| A.3 | The answer to this would have to come from the partners that had the problem with using this basis. Depending on the situation, it certainly may be appropriate to use participant counts as a basis to allocate certain costs or pools of costs. The answer to the previous question identifies several factors that should be considered when using participant counts as an allocation basis. |
| Q.4 | What method should be used in determining how the one-stop system expenses are allocated to the various partners? For example, we'd like to keep our cost allocation plan simple and base the shared costs of the entire system on the number of staff in the one-stop center and affiliate sites? |
| A.4 | All shared expenses of the one-stop system are to be allocated among the appropriate partners. Per OMB Circulars, costs are to be allocated based on the benefits received; therefore, it is necessary to determine which partners benefit from each cost and pool. The measure of the benefit is based on the value or worth of the expense to each partner. Chapter I-3 of the TAG describes a variety of methods that may be used to measure the benefit received by each partner. The standards for judging whether a method of allocation is reasonable are to determine if the method: corresponds to the costs being allocated; produces an equitable distribution of costs; is efficient to use; and is consistently applied over time. Without knowing all of the details of the example cited it is difficult to judge its reasonableness. However, a review of the proposed methodology would probably focus particular scrutiny on whether the partners could demonstrate that the number of staff in the Center and at affiliate sites appropriately corresponds or correlates to the pool of the entire shared costs of the system. |
| Q.5 | Would you please describe the proper methodology for using FTEs? |
| A.5 | When the costs of common staff functions are included in the shared costs budget, it may be more equitable to pay for these costs through the use of Full Time Equivalents (FTEs). The staffing for these functions may be provided by different entities that will have different pay scales, pay levels, and fringe benefits. By using FTEs as a payment method, partner organizations need not address these differing pay scales. In order to use FTEs as a payment method, all of the partner programs benefiting from the shared function must provide the necessary staff resources in the same proportion as their allocable share. It is only appropriate to use FTEs for payment of common staff functions. Chapter I-4 of the TAG provides an example of how this methodology may be used and they also provide cautions should partners consider its use.
The FTE methodology described in the TAG is very different from the decisions made by some local areas in the 1st Year MOUs to allocate the staff costs of the One-Stop center based on which partners were willing to contribute staff to the Center. In many instances, it has been difficult to demonstrate that the partners’ contribution of staff was based on benefit received. If staffing levels are to be used as an allocation base to allocate the staff costs, there must be information that the staffing decisions were based on benefit received and not just contributions from the partners. The Year 1 MOUs are being viewed as a learning curve so methodologies may have been used that were not properly supported. However, the Year 2 MOUs should be constructed so as to ensure full compliance with the TAG’s principles. |
| Q.6 | Is a cap on salaries and fringe allowable to level the differences between high paying agencies and low paying ones? Alternatively, can we use average salaries? |
| A.6 | These methodologies were discussed at the USDOL/ETA TAG training session in Chicago. USDOL/ETA’s position was that the cost allocation and resource sharing processes must be based on the actual costs incurred by the partner agencies. Since the use of capped or average salaries would not result in allocations being made on actual costs, these methodologies would not be allowable. The FTE methodology detailed in the TAG is offered as a method that could be used to address the issue of wage disparity among partners. |
| Q.7 | So you shouldn’t go into the process with the statement, "I only have $10,000" -- but that might be the reality (Title II). However, you’re saying we can’t limit the system based on what partners are willing to contribute? |
| A.7 | The TAG is clear that shared system costs must be allocated to those programs that benefit from the incurrence of the cost. This must be done based on the benefits received and not on the availability of funds. The Summary and Explanation section of the Federal register on Resource Sharing states, "that in no case would it be proper for a predetermined budgeted amount to be set as the actual cost for any program. Cost Allocation is always based on actual costs, which may be greater or less than the budget planning levels".
It is SED’s intent that the money referred to in the question was allocated by SED to local educational entities for shared system costs. The local educational partners have their total local allocation available to help fund any shared services costs identified by the partners in the MOUs. |
| Q.8 | Could you give us examples of "in-kind"? For example, if the Community College owed $2,000, but didn’t have VATEA dollars so they write a check from other accounts. Is that in-kind? |
| A.8 | There is a lot of confusion about the term "in-kind" as it relates to resource sharing in the One-stop environment. "In-kind" contributions are defined in the OMB Circulars as donations of goods, services or volunteer time from a third party. They are not a cost to the receiving agency. As defined in Chapter I-4 of the TAG, under certain circumstances, partners may provide third-party in-kind contributions as resources to pay for their fair share of allocated costs. The other partners in the system must be willing to agree to accept these in-kind contributions as payment.
The term in-kind should not to be confused with contributions to the One-Stop by partner programs of such things as space, equipment, staff or other goods and services for which the partner program incurs a cost. In the example stated, VATEA’s payment of a check for $2,000 from "other accounts" would represent a cash transfer in satisfaction of amounts owed by VATEA and would not represent an in-kind payment as defined in the TAG. |
| Q.9 | We received a matrix of federal funding that shows the levels for the partners. Can we use the relative funding levels to determine allocable share of costs? |
| A.9 | The allocation base used should be a measure of actual cost or actual effort expended. It should not be based solely on a plan, budget or other estimate of planned activity. It is generally not appropriate to use the relative amount of funds available (budget) to allocate since budgets are not a measure of actual activity or effort. The purpose of the matrix of federal funding was to illustrate what funding was available in the local area and to help establish priorities of service and to help in eliminating the duplication of services. |
| Q.10 | Under my program, I have a 5% administrative cap so I can’t pay for the WIB director’s salary, but I can pay for computer equipment or supplies and in the end it balances out. Is this what you meant about resource sharing within the One-Stop system? |
| A.10 | Resource sharing is defined as the process that partners will use to pay for, or fund, their allocable share of One-Stop shared system costs. The methods that partners use to pay for their fair share of costs are cash payments, provision of goods or services, use of FTEs and in-kind contributions. In the example cited, it would be allowable for the partner to pay for such items as computer equipment or supplies (assuming these costs were identified in the One-Stop budget as shared system costs) as their allocated share of the One-Stop system costs.
Keep in mind that the resources provided to support the shared costs must equal the total proportionate share of the partner. If a partner either over-funds or under-funds its proportionate share, then that partner’s share must be "made whole" through cash payments. In the example above, if the partner’s allocated share of One-stop system costs was $10,000 and if the cost of computer equipment and supplies that they provided was only $8,000, then their share would have to be "made whole" through a cash payment of $2,000. |
| Q.11 | Can you summarize the cost allocation and resource sharing processes and how they are related? |
| A.11 | First, the WIB defines its vision for the One-Stop system; then the partners meet to determine how to carry out the Board’s vision. The design of the local system will have a major impact on the determination of the shared costs of the system. After the shared costs of the system are determined, the appropriate cost allocation methodologies are chosen and applied. This process will determine each partner’s fair share of the costs of the system. At that point, the partners will discuss resource sharing which is a determination of how the costs of the system will be paid. The processes of cost allocation and resource sharing are two distinct, yet interrelated processes. Based on the level of resources that are available from the partners in the local area, it may be necessary to go back and revise the vision for the system and to re-visit the shared costs that were identified. It may be necessary to go back and forth in these processes several times before the partners can agree on a final plan. |
| Q.12 | What is the process if the system makes money? |
| A.12 | Program income earned as a result of shared activities or shared costs is attributable to all partners. The program income should be allocated in the same proportion as the shared costs. The earning, allocation, and use of program income should be addressed in the Resource Sharing Agreement. |
| RECONCILIATION & RECORDKEEPING REQUIREMENTS | |
| Q.1 | Once the cost allocation plan and resource sharing agreement is completed and the One-Stop system is operational, what further steps must be taken? |
| A.1 | Even though the One-Stop system is not required to submit financial reports to NYSDOL it is necessary for the actual expenses that were incurred to be tracked. The fiscal agent for the system must maintain records detailing the shared expenses incurred by all the partners in the system. The fiscal agent and the partners of the system determine the methods used to track these expenses. The records that support the One-Stop system’s cost allocation plan and resource sharing agreement will be subject to A-133 audit, Federal Review, NYS Comptroller’s review, and review by the Financial Oversight and Technical Assistance (FOTA) unit of WD&T.
In addition to tracking the expenses of the system, it will also be necessary to maintain documentation supporting the actual allocation of these expenses to the partners. At a minimum, on a quarterly basis, the allocation is to be updated and applied to the actual expenses. A comparison is then to be made to the actual contributions by each partner. If there are material variances between the actual bottom line figures and the resource sharing agreement the partners may need to review their expenses and the resource sharing agreement. It should be noted that the time spent by the fiscal agent on maintaining the system’s records would be a shared expense of the system. It is to be included in the cost allocation plan. |
| Q.2 | Someone must be designated as fiscal person for the One-Stop system to track costs and reconcile costs -- this is a shared cost. Staff must keep records documenting time spent on this process - e.g., time sheets, time studies - must have written record to document time spent for any staff (not just the fiscal person) who are charged as a shared cost. You must put in writing how you decided on shared costs the how and the why - and all partners must agree.
Do you really expect us to do all this? |
| A.2 | The TAG is very clear in detailing all of the requirements for documenting shared One-Stop system costs. All partners within the One-Stop system that receive federal funds must maintain financial management systems that are sufficiently documented to permit the tracing to a level of expenditure adequate to establish that federal funds have not been used in violation of the restrictions and prohibitions of the applicable laws. The level of detail should be consistent with Generally Accepted Accounting Principles (GAAP) as required by the OMB cost principles. |
| Q.3 | If at reconciliation the partner owes money, whom is it paid to? If the partner has no money, what happens then? |
| A.3 | These arrangements should be negotiated by the partners and detailed in the MOU. The payments could be handled in a few different ways. Probably the easiest way would be for payments to be handled through one partner acting as a broker. In that way whichever partners under contributed would write one check to this "broker". Then that broker would pay the partners which over contributed. It would be necessary in the case of state agency partners to develop contracts for the payments. The requirements of each state agency may vary.
The WIA legislation requires that partner must contribute a "fair share" of operating costs of the One-Stop delivery system proportionate to the use of the system by individuals attributable to the partner’s program. By signing the MOU, partners agree to support the system to the level identified in the cost allocation plan and resource sharing document, which are part of the MOU. There is no caveat in the legislation that would allow a partner to contribute less than their fair share. Each local area should appoint a fiscal agent to reconcile costs allocable to each partner with resources being provided by each partner. This reconciliation should take place no less frequently than quarterly. If the quarterly reconciliation indicates that a partner's allocable share may exceed that partner's ability to pay, the partners may decide to change the level of resources to be provided by the respective partners in the subsequent quarter to minimize these under contributions. We recommend that the MOU specify that payments among partners be made at the end of the MOU period (generally June 30). One of the main purposes for the CAP and RSA is so that each partner knows what they are expected to contribute and what their allocable share is. If they won't be able to fund their allocable share, this should be made known prior to finalization and the signing of the MOU. The MOU should address issues such as partners who have no money to pay. If partners don't pay what they owe, then it follows that some other partner paid more than their fair share. If this happens, it could result in cost disallowances in an audit situation for the partner that overcontributed. |
| Q. 4 | What documentation is required to substantiate cost-sharing expenditures? |
| A.4 | In discussing this topic it is important to understand that the One-Stop system itself is not a specific direct recipient of Federal awards as an entity. The costs of the One-Stop system are funded by the partners, and these funding arrangements are detailed in the MOU’s cost allocation and resource sharing plans. Therefore, there are two separate levels of record keeping that are required in regard to the shared One-Stop system costs. First, is the level of record keeping that is required by each partner program as part of their fiduciary responsibility to their particular funding source. Second, there is the level of record keeping that is required to support the costs and allocation methodologies identified in the MOU’s cost allocation and resource sharing plans.
Regarding the record keeping that is necessary to support the costs of the One-Stop system that are incurred by a partner, each partner must maintain records sufficient to document their costs as being allowable to their funding source. The A-133 Compliance Supplement identifies the specific compliance requirements relative to the allowability of costs and the level of documentation required to properly support those costs. The sections of the uniform administrative requirements which address financial management standards for federal awards indicate that financial management systems need to be sufficiently documented to permit the tracing to a level of expenditure adequate to establish that federal funds have not been used in violation of the restrictions and prohibitions of the applicable laws. The allowable costs provisions of these requirements indicate that allowability of costs is to be determined in accordance with the OMB Cost Principles Circulars applicable to the type of organization incurring the cost. Thus, the level of detail should be consistent with GAAP as required by the OMB principles. Concerning record-keeping for the One-Stop system, the partners must designate which partner is going to be responsible for collecting the cost data to support the cost allocation plan. This should be spelled out in the MOU. Regarding the record-keeping that is necessary to support the MOU’s cost allocation and resource sharing plans, it is up to each LWIA to decide the specific level of documentation that the partners will need to submit in support of their shared system costs. Remember, as discussed above, the partners are mandated to maintain records to fully document the costs they incur. The question here is, how much of those records do the partners need to submit to the fiscal agent in order to support those costs? Minimally, each partner should provide financial data that is sufficient to ensure the LWIA’s designated fiscal agent, the other partners, and the WD&T financial oversight staff, that the costs in question (and any other supporting financial data) were incurred in accordance with the terms specified in the MOU. From a financial oversight perspective, WD&T would seek to ensure that there was a reasonable basis for the fiscal agent to make judgments and decisions when reconciling the cost data on a quarterly basis. The documentation provided should support whatever was agreed to in the MOU. Currently, there is a lack of specific federal guidance on this subject. WD&T will work with local areas to develop and disseminate additional guidance on this topic. |