--A. BACKGROUND and
DEFINITIONS
A1) What is the federal
statute which created the Empowerment Zone and Enterprise
Community Program?
The statute that created the
program is the Omnibus Budget Reconciliation Act of 1993
("OBRA 1993"). Language specific to the program
can be found in Title XIII, Subchapter C, Part I of OBRA
1993.
The portions of the statute
which directly address the EZ/EC SSBG grants are codified
in the United States Code at 42 USC 1397 et.seq. (which
is the citation for the Social Services Block Grant
program).
A2) What federal agencies are
directly involved in implementing this program?
OBRA 1993 authorized the U.S.
Department of Health and Human Services (HHS) to grant
funds to states for the Empowerment Zones (EZ) and
Enterprise Communities (EC), and the U.S. Departments of
Agriculture (USDA) and Housing and Urban Development
(HUD) to designate the EZs and ECs.
In addition, many other federal
agencies are assisting the EZs and ECs in various ways.
A3) Which federal regulations
directly concern the Empowerment Zone and Enterprise
Community Program?
USDA and HUD published
individual regulations for this program. The USDA
regulation is contained within the Code of Federal
Regulations at 7 CFR Part 25 (published in the Federal
Register on Monday, February 6, 1995, starting on page
6945). The HUD version is at 25 CFR Part 597 (published
in the Federal Register on Thursday, January 12, 1995,
starting on page 3034).
HHS has not promulgated a new
regulation for the Empowerment Zone and Enterprise
Community program. Given that the HHS-managed Social
Services Block Grant program is the vehicle for the EZ/EC
SSBG grants, many portions of the existing HHS block
grant regulations apply to this program. Those
regulations are codified at 45 CFR Part 96. The terms and
conditions of the grants for this program specify that
the following sections of the HHS block grant regulations
apply: 45 CFR parts 96.11; 96.12; 96.15; 96.30; 96.31;
96.32; 96.33; 96.50; 96.51; and 96.52.
A3) What are EZ/EC SSBG
funds?
Congress appropriated $1 billion
to the HHS Social Services Block Grant (SSBG) program for
special funding for EZ and EC activities. EZ/EC SSBG
funds are also referred to as "Title XX" funds.
This is a reference to the fact that the authority for
the Social Services Block Grant, the vehicle for the
EZ/EC SSBG grants, is based in Title XX of the Social
Security Act.
A6) What are the statutory
"goals" for the use of the EZ/EC SSBG funds?
OBRA 1993 specifies that each EZ
and EC shall use the EZ/EC SSBG grant to provide services
directed at achieving one or more of three broad goals.
These goals are listed on page 30 of the EZ/EC
Application Guide and in the answer to question B4 below.
A7) What are the statutory
"program options" for the use of EZ/EC SSBG
funds?
OBRA 1993 lists several
"program options" which identify and suggest
the types of activities which an EZ or EC should consider
financing with EZ/EC SSBG funds in order to achieve one
or more of the three broad statutory goals. The program
options are listed on page 30 of the EZ/EC Application
Guide and in the answer to question B5 below.
A8) What is a grantor?
A grantor is the entity which
awards a grant. In the EZ/EC program, HHS is the grantor
of the EZ/EC SSBG funds.
A9) What is a grantee?
A grantee is the entity which
receives a grant from a grantor. In the EZ/EC program,
the State agency which received the award of EZ/EC SSBG
funds from HHS is the grantee.
A10) What is a subgrantee?
A subgrantee is the entity to
which a grantee gives authority for undertaking a
specific part of the work for a grantee. In the EZ/EC
program, the subgrantee is the entity or entities to
which the state agency obligates the EZ/EC SSBG funds.
Typically, the subgrantee is the organization which will
manage the EZ or EC activities.
A11) What is a lead entity?
A lead entity is the local
organization that will manage the individual EZ's or EC's
activities. Typically, these are either local governments
or not-for-profit organizations.
A12) What is the definition
of "draw down"?
A draw down is the action by
which the grantee (the state) accesses federal funds
granted to it. In this program, the state will draw down
the EZ/EC SSBG funds from the federal government in
accordance with the EZ or EC strategic plan.
A13) What is an EZ/EC
strategic plan?
The EZ or EC strategic plan is
the document which the local government and other
organizations submitted to USDA or HUD in June 1994 in
their quest to have census tracts in their areas
designated an Empowerment Zone or Enterprise Community.
The Secretaries of HUD and USDA designated areas as an EZ
or EC based on these strategic plan documents.
A14) What local organization
will manage the EZ or EC implementation activities?
The activities must be managed
in accordance with the EZ or EC strategic plan submitted
in June 1994, or modifications made to it since that
time. Many strategic plans explicitly state that either
the area's local government or a not-for-profit
organization will manage the implementation activities.
This local organization is referred to as the "lead
entity".
A15) What is an EZ or EC
benchmark document?
HUD and USDA are requesting that
each EZ or EC use the information in its strategic plan
to create a "benchmark" document including time
lines and specific projects and services which the EZ or
EC lead entities will undertake over the first two years
of the implementation of the EZ/EC program. Where the
strategic plans indicates generally what a locality has
proposed to do, the benchmark documents will explain,
with some detail, exactly how the locality intends to
achieve the goals.
A16) What is the definition
of "obligate" for this program?
An "obligation" is a
legal agreement between the state (as the grantee) and a
designated EZ or EC lead entity (as the subgrantee) that
makes monies available to the EZ or EC to use in
accordance with statutory and regulatory requirements.
A17) What is the definition
of a "Memorandum of Agreement"(MOA) in the
context of this program?
HUD and USDA are requesting each
lead entity to sign a memorialization of an agreement
with HUD or USDA and their state government that outlines
the roles and responsibilities of the EZ or EC, HUD or
USDA, and the state government. This is referred to as
the Memorandum of Agreement or "MOA."
The MOA does not affect the
fiscal rules of the grants awarded by HHS to the state.
These rules and responsibilities are explained in the
terms and conditions of the grants awarded by HHS to the
state in December 1994.
A18) What is a
"qualified plan"?
OBRA 1993 authorized the
Secretary of HHS to award EZ/EC SSBG funds to states for
local EZs and ECs. That statute stipulates that the
Secretary of HHS shall make these grants to fund
activities outlined in "qualified" EZ or EC
strategic plans, and it defined a "qualified
plan" as one which:
The Secretary of HHS awarded the
EZ/EC SSBG funds on December 21, 1994, after determining
that the EZ and EC plans submitted by the localities
designated by HUD and USDA were "qualified."
A19) What does the term
"increased flexibility" for the use of EZ/EC
SSBG funds really mean?
Increased flexibility refers to
the expanded range of programmatic activities that can be
financed with EZ/EC SSBG monies, as opposed to the more
limited options for typical Title XX Social Services
Block Grant funds. Flexibility does not imply a
relaxation of the fundamental financial management
principles specified in state or federal law and
regulations.
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--B. USE OF EZ/EC SSBG
FUNDS
B1) What is the amount of the
EZ/EC SSBG grant for each EZ and EC?
$40 million for each rural
Empowerment Zone; $100 million for each urban Empowerment
Zone; and $2,947,368 for each Enterprise Community.
B2) What federal agency awards
these grants?
The U.S. Department of Health and
Human Services (HHS).
B3) When will HHS award the
grants?
OBRA 1993 includes a timetable
for when HHS must award the EZ/EC SSBG grants.
The statute stipulates that HHS
must award, to the appropriate states, grants for the
Enterprise Communities on the date of designation. HHS
awarded these grants to the states on December 21, 1994.
OBRA 1993 specifies that HHS must
award the grants to the states for the Empowerment Zones
in two equal installments, one-half on the date of
designation and the second one-half on the first day of
the following federal fiscal year. Accordingly, HHS
awarded one-half of each Zone's grant to the state on
December 21, 1994, and the second half on October 1,
1995.
B4) Does the authorizing
statute restrict how an EZ or EC may use the EZ/EC SSBG
grant?
Yes. OBRA 1993 specifies that an
EZ or EC shall use the grant funds to benefit residents
of the designated EZ or EC by providing services directed
at one or more of the following three goals:
These goals are outlined on page
30 of the EZ/EC Application Guide. They allow for broader
uses than those that apply to the "regular"
Social Services Block Grant (Title XX) program. An EZ or
EC may use EZ/EC SSBG funds for economic and community
development activities, as well as social services
activities which are typical to the Title XX program.
Within these broad goals, OBRA
1993 lists seven program options (see question B5).
B5) What are the program
options described in the statute that created the
Empowerment Zone and Enterprise Community program?
As listed on page 30 of the EZ/EC
Application Guide, the OBRA 1993 statutory program
options are as follows:
- fund community and economic
development services focused on disadvantaged
adults and youths, including skills training;
transportation services; and job, housing,
business, and financial management counseling
- support programs that
promote home ownership, education, or other
routes to economic independence for low-income
families, youth, and other individuals
- assist in the provision of
emergency and transitional shelter for
disadvantaged families, youth, and other
individuals
- provide assistance to
nonprofit organizations and community and junior
colleges so they will be able to provide
disadvantaged individuals with opportunities for
short-term training courses in entrepreneurial,
self-employment, and other skills that will
promote individual self-sufficiency and the
interests of the community
- fund programs to provide
training and employment for disadvantaged adults
and youths in construction, rehabilitation, or
improvement of affordable housing, public
infrastructure, and community facilities
- provide support for
residential or nonresidential drug and alcohol
prevention and treatment programs that offer
comprehensive services for pregnant women and
mothers and their children, and
- establish programs that
provide activities outside of school hours,
including keeping school buildings open during
evenings and weekends for mentoring and study
These program options are found
in the HUD and USDA regulations for the program as well
as in OBRA 1993.
B6) May an EZ or EC locality
purchase or improve land and facilities using EZ/EC SSBG
funds?
An EZ or EC may finance any
portion of a purchase or improvement of land, or the
purchase, construction, or permanent improvement of any
building or other facility with EZ/EC SSBG funds only if
the purchase or substantial improvement:
1) is included in the EZ's or
EC's strategic plan;
2) would benefit residents of the
census tracts which make up the EZ or EC;
3) is an activity for meeting any
of the authorizing statute's three broad goals; and
either
a) the purchase or improvement is
an activity undertaken to accomplish one of the
authorizing statute's program options; or
b) the locality has formally
requested and received a waiver from HHS for this
activity.
B7) What must an EZ or EC do
to apply for the above mentioned waiver from HHS?
An EZ or EC may request such a
waiver by writing a letter outlining the request to:
Donald Sykes Director, Office of
Community Services Administration for Children and
Families U.S. Department of Health and Human Services 370
L'Enfant Promenade -- 5th floor West, S.W. Washington, DC
20447
B8) How much EZ/EC SSBG
funding may an EZ or EC use between December 21, 1994,
and December 21, 1995?
The locality may use whatever
amount is stipulated in its plan for any given period,
which will vary in each EZ and EC. Each EZ or EC should
refer to its strategic plan to determine how much of the
EZ/EC SSBG funds may be used during any time period. The
locality may use whatever amount is stipulated in its
plan for any given period.
B9) May an EZ or EC amend its
strategic plan?
Yes. Any EZ or EC which is
considering amending its strategic plan should consult
with HUD and USDA about the preferred process for making
such changes.
B10) Will HHS review
amendments to EZ or EC strategic plans or benchmark
documents to assure that the amended activities may be
financed with EZ/EC SSBG funds?
No. HHS will not review
amendments to the EZ or EC strategic plans or benchmark
documents.
If the EZ or EC lead entities, or
the state agencies responsible for the EZ/EC SSBG grant,
have general questions or concerns about a proposed use
of funds, they should consult the broad goals and program
options outlined in OBRA 1993. As an alternative, they
can consult with the HHS Regional Director in their area
or the HHS EZ/EC Central Support Team. The HHS Team's
main phone number is (202) 401-3951.
B11) May an EZ or EC use EZ/EC
SSBG funds to finance activities located outside the
census tracts which make up the EZ or EC?
Yes. However, all projects and
services financed in any way with EZ/EC SSBG funds must
benefit residents of the designated census tracts.
B12) What is the time frame
for when a state must "obligate" the EZ/EC SSBG
funds?
States must obligate the funds
within two years of the date HHS awarded the grant to
them. That is, a state must obligate all the funds
awarded to it for an EC, and one-half of the total
awarded for an EZ by December 20, 1996. The remaining
half of the amount awarded for an EZ must be obligated by
the state by September 30, 1997. (See question A16 for a
definition of "obligate.")
There are no federal requirements
concerning when a lead entity may obligate the funds.
B13) Who will decide what
activities an EZ or EC may fund with the EZ/EC SSBG
grant?
The lead entity, through its
community-based governance process, should decide what
activities will be financed with EZ/EC SSBG funds. The
local EZ or EC strategic plan, as submitted by the local
entity seeking designation as an EZ or EC, indicates how
the locality will use the EZ/EC SSBG money. The plan was
part of the local entity's general application for
designation as an EZ or EC and may have been amended and
augmented since the date that application was submitted
to HUD or USDA.
B14) May an EZ or EC undertake
projects or provide services which are financed partially
with EZ/EC SSBG funds and partially with funds from other
sources?
Yes. An EZ or EC may use the
EZ/EC SSBG funds in concert with funds from other
sources, as long as the funds are spent in accordance
with the EZ or EC strategic plan and the statutory
requirements included in Title XIII, Subchapter C, Part I
of OBRA 1993.
B15) May an EZ or EC use EZ/EC
SSBG funds to replace existing public and private
funding?
No. OBRA 1993 stipulates that an
EZ or EC may not use EZ/EC SSBG funds to supplant federal
or non-federal funds for services and activities which
promote the purposes of the program. The underlying
philosophy of this requirement is that states or
localities should not use the fact that a neighborhood
will be receiving EZ/EC SSBG funds as a rationale for
reducing the amount of state or local resources devoted
to that area.
B16) May an EZ or EC use EZ/EC
SSBG funds to finance an income-producing activity?
Yes. The local strategic plan may
call for the EZ or EC to use EZ/EC SSBG funds to finance
activities that produce income. (For example, an EZ or EC
may establish a job training activity in which trainees
actually produce and sell products.)
B17) May an EZ or EC invest
EZ/EC SSBG funds for the sole purpose of earning interest
income?
No. Neither an EZ or EC nor a
state may use the EZ/EC SSBG funds solely to earn
interest income.
B18) Are the EZ/EC SSBG funds
subject to the same programmatic restrictions as regular
Social Services Block Grant funds?
No. The EZ/EC SSBG funds are
subject to substantially fewer restrictions on the
programmatic uses than the "regular" Social
Services Block Grant (Title XX) funds.
B19) May an EZ or EC use EZ/EC
SSBG funds to capitalize a revolving loan fund?
Yes. When implementing such a
fund, the EZ or EC should meet the following
requirements:
The EZ or EC should exercise
prudent fiscal procedures when asking its state to give
it access to the EZ/EC SSBG money for the revolving loan
fund. For example, it should estimate the amount of funds
to be lent during a quarter and ask the state to draw
down that amount.
B20) May an EZ or EC include
in its benchmark document plans to immediately draw down
a portion of the EZ/EC SSBG fund and use it to capitalize
a revolving loan fund?
An EZ or EC may include in its
benchmark document a strategy to draw down the full
amount of the EZ/EC SSBG grant to capitalize a revolving
loan fund if it expects to actually loan that amount
within a reasonable period of time. The EZ or EC should
exercise prudent fiscal procedures when establishing
revolving loan mechanisms with the EZ/EC SSBG funds.
B21) May an EZ or EC transfer
EZ/EC SSBG monies from a revolving loan fund, including
any interest earned by the fund, to enable it to use the
monies for activities other than the revolving loan fund?
Yes, but only under certain
circumstances:
1) The new activity must conform
to the statutory purposes for the use of EZ/EC SSBG
funds.
2) The EZ or EC must modify its
strategic plan to reflect the change in allocation of the
EZ/EC SSBG funds, and
3) The modification must be a
product of a local governance, planning, and citizen
participation process, as approved by either USDA or HUD.
EZs or ECs should be careful when
implementing such a change. They should ensure that the
EZ/EC SSBG funds removed from the revolving loan fund are
quickly applied to a new activity. Certain fiscal
management principles and aspects of the Cash Management
Improvement Act apply in this situation. (See Question
B26.)
B22) May an EZ or EC use EZ/EC
SSBG funds to increase the loan pool of a previously
capitalized revolving loan fund?
Yes, as long as the locality
meets the requirements listed in question B19.
B23) The HUD and USDA
regulations specify that an EZ or EC may use the EZ/EC
SSBG funds to capitalize revolving loan funds "for
low income individuals." How should an EZ/EC
locality determine whether or not a person is "low
income"?
There are no explicit income
requirements for the use of EZ/EC SSBG funds. The HUD and
USDA regulations include these words to underscore the
importance of using activities such as revolving loan
funds to assist needy residents of the EZ or EC.
B24) The HUD and USDA
regulations specify that an EZ or EC may use the EZ/EC
SSBG funds only to assist "residents" of the
census tracts which make up the EZ or EC. What are the
requirements for determining who is a resident?
There are no federal requirements
concerning how an EZ or EC may define the term
"resident" for this program. Each EZ and EC
should establish a reasonable definition for this term.
B25) Must an EZ or EC submit a
budget to HHS outlining the activities it plans to
finance with EZ/EC SSBG funds?
No. HHS will not require EZs or
ECs to submit budgets of any sort.
HUD and USDA are requiring the
EZs and ECs to establish benchmark documents and MOAs
which specify their planned activities, including those
to be financed with EZ/EC SSBG funds. The lead entity
should confer with HUD or USDA about their requirements
for budgetary information.
It is possible that the grantee
state agency may require EZs and ECs to prepare detailed
budgets outlining activities to be financed with EZ/EC
SSBG funds.
B26) Does the federal Cash
Management Improvement Act (CMIA) apply to the federal
funds awarded for the EZs and ECs?
Yes. The Cash Management
Improvement Act and related OMB Circulars (A-133 and
A-128) apply to the EZ/EC SSBG awards. Guidance is
provided in 31 CFR Part 205 ("Rules and Regulations
for Funds Transfer") and by 31 CFR Part 205.20
("Cash Advances").
The CMIA stipulates that federal
grant funds may not be drawn down until a reasonable time
before they are needed for an actual expenditure.
Specifically, advances must be limited to the minimum
amounts needed and timed in accordance with actual,
immediate cash requirements in implementing a program or
project.
B27) Is it possible to waive
Cash Management Improvement Act requirements?
No. It is not possible to waive
the CMIA requirements without Congressional action.
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--C. Memorandum of Agreement
(MOA), Benchmark Document, and Strategic Plans
C1) Must an EZ or EC provide a
list of activities for the entire ten year designation
period?
HHS is not requiring any EZ or EC
to provide a list of activities beyond that included in
the strategic plan. However, HUD and USDA are requesting
localities to produce benchmark documents listing planned
activities for the initial two years of implementation,
and annually thereafter. States may require similar
documentation.
C2) May an EZ or EC use a
portion of the EZ/EC SSBG funds before it signs a MOA?
Yes. EZs and ECs should contact
HUD or USDA for recommended approaches.
C3) May an EZ or EC use EZ/EC
SSBG funds to finance administrative or programmatic
activities undertaken prior to the date of the MOA?
Yes. An EZ or EC may be reimbursed
for expenses incurred prior to the signing of the MOA as
long as the activity:
1) is included in the original or
amended EZ or EC strategic plan;
2) will benefit residents of the
census tracts that make up the EZ or EC area; and
3) is an activity for meeting any
of the three broad goals stated in OBRA 1993.
This includes many activities
typically defined as "administrative" and
"programmatic."
C4) May an EZ or EC request its
state to draw down the EZ/EC SSBG grant in advance of the
time it actually will expend the funds?
No. The EZ or EC should request
its state to draw down the EZ/EC SSBG funds only when it
is ready to use the money to finance a strategic plan
activity.
C5) Who or what agency will
approve a change in an EZ or EC strategic plan?
The initial review of proposed
changes should be at the local level. The EZ or EC lead
entity or governing body should follow its own process
for such amendments, as outlined in its plan. Once the
locality has determined that a change is warranted, that
decision will be reviewed by either HUD (urban) or USDA
(rural).
C6) Who determines whether a
proposed activity is eligible to be financed with EZ/EC
SSBG funds?
Each EZ and EC must ensure that
its use of EZ/EC SSBG funds is within the OBRA 1993
requirements. The locality should be able to reasonably
identify the connection between each activity to be
funded with the EZ/EC SSBG funds and the broad statutory
goals contained in OBRA 1993. (See question B4 for a
listing of the statutory goals.) The local expenditures
of EZ/EC SSBG fundsubject to the review through the
annual Single Audit Act process.
C7) Does HUD or USDA approval
of an EZ's or EC's Benchmark document mean that any or
all activities included in that document meet the
requirements of the authorizing statute?
No. It is each EZ's and EC's
responsibility to abide by OBRA 1993 requirements when
using EZ/EC SSBG funds to finance programs and
activities. EZs and ECs should not consider the HUD or
USDA endorsement to be the federal government approval of
statutory conformity of the locality's proposed uses of
EZ/EC SSBG funds.
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--D. SUPPLANTATION ISSUES
D1) Must the EZ or EC indicate how
much state, local, and private funds are being directed
to the EZ/EC census tracts to establish a basis for
determining that the EZ/EC SSBG funds are not being used
to supplant existing resources?
No, there is no need for a state or
locality to catalogue existing resources. Assurances
provided by each state as a signatory to the
certifications in the nomination and application forms
constitute the state's assurance that the requirements
will be met. HHS does not require further information,
documentation, or justifications concerning these
assurances.
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--E. ROLE OF THE STATE
E1) Are the states required to
abide by the same fiscal requirements as they are for the
"regular" SSBG grants?
No. The states are subject to
substantially fewer fiscal requirements for the EZ/EC
SSBG grant(s) than they are for the "regular"
Social Services Block Grant (Title XX) grant. States must
comply with the requirements listed in the Terms and
Conditions of the EZ/EC SSBG grants HHS awarded on
December 21, 1994.
E2) What is the HHS policy
regarding state administrative costs?
HHS encourages states to minimize the
use of EZ/EC SSBG funds to finance the state
administration of the grants. It is the federal intent
that the states have a limited role with the EZ/EC SSBG
grants and should not incur large expenses when
administering them.
In any case, the local EZ or EC
strategic plan must include a provision allowing for such
an expenditure before an EZ or EC may allow the state to
use the funds for such a purpose.
E3) When does the federal
government consider funds to be obligated?
An "obligation" is a legal
agreement between the state (as the grantee of the EZ/EC
SSBG funds) and a designated EZ or EC (as the subgrantee)
that makes the EZ/EC SSBG monies available to the
locality, in accordance with EZ/EC statutory and
administrative requirements.
Under the HHS block grant regulations
(45 CFR Part 96) defining the specific form of that legal
obligation agreement is the responsibility of each
individual state, depending on the particular laws and
procedures of that state. Therefore, HHS considers the
EZ/EC SSBG funds to be obligated by the state when the
state concludes that the obligation has been made for its
own purposes.
E4) Will the federal government
award separate funds to the states for their costs of
administering these grants?
No.
E5) If a state incurs costs in
administering this program, may it be reimbursed from the
locality's EZ/EC SSBG grant?
Yes, if the local strategic plan
includes such a provision.
E6) What are the federal guidelines
concerning the amount of overhead an individual service
provider may charge for carrying out an activity outlined
in an EZ's or EC's strategic plan?
There are no federal guidelines
specifically on this point. However, the HHS regulations
for the "regular" SSBG stipulate that state
administrative procedures and statutes apply to service
providers' uses of the funds which come through the SSBG.
Therefore, the answer to this question will vary from
state to state. Localities should look to their state
SSBG administrative requirements for an answer to this
question.
E7) Do the states have access to
the EZ/EC SSBG funds now?
Yes. The funds are in a federal
account waiting to be drawn down by the states for the EZ
or EC. HHS awarded the EZ/EC SSBG grants to the states
for the ECs on December 21, 1994, and for the EZs on
December 21, 1994, and October 1, 1995, but the states
may not draw down the funds until the EZ or EC requests
them. This procedure for retaining funds in a federal
account until the grantee or subgrantee is ready to
expend them is the normal procedure for most federal
grants.
E8) What are the state's options
for renegotiating or modifying an EZ or EC strategic
plan?
States which have suggestions for
modifying a locality's strategic plan should take their
concerns to the EZ or EC.
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F -- Financial Reporting
Requirements
F1) What are the HHS financial
reporting requirements for the EZ/EC SSBG funds?
There are minimal financial
reporting requirements included as terms and conditions
in the HHS grant awarded to the states:
Annual reports are due to HHS 90
days after the end of the fiscal year in which the awards
are made to the states. Therefore, states that include an
Empowerment Zone must submit a report by December 31,
1995 for the first half of the Zone's EZ/EC SSBG grant,
and one report no later than December 31, 1996 for the
second half of the Zone's grant. States that include an
Enterprise Community must make one report no later than
December 31, 1995.
An interim report on a terminated
EZ or EC is due to HHS 30 days after the termination of
that EZ or EC.
A final report is due to HHS 180
days after the designations of all Empowerment Zones and
Enterprise Communities located in the state have expired.
These state reports should be
submitted on the standard federal financial reporting
form, "SF-269."
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--G. AUDITS
G1) How will grantees and
subgrantees be audited for fiscal issues?
Audits are financial examinations,
and are a part of the fiscal responsibilities of the
recipients of the EZ/EC SSBG grants.
The EZ/EC SSBG grants are included in
the states' annual "Single State Audits" which
cover all federal funding received and used by each
state. Under the Single State Audit requirement, states
must provide the federal government with one audit report
that includes information on all federal fundingunding
received and used by that state in that year.
State requirements for subgrantees
vary, but most states require that subgrantees, or
entities which receive federal money through the state,
contract with an accountant to perform an audit of the
organization which is actually spending the funds.
Reports of these subgrantee audits are then submitted to
the state, which hires its own auditor to consolidate the
reports and to reconcile any "findings" or
issues.
Most states also perform some sort of
random "sampling" of their subgrantees, which
involves sending an auditor from the state to examine
records and visit programs. It is possible that states
will send representatives to visit the EZs and ECs for
such purposes at some point during the program.
G2) May an EZ or EC contract with
a private firm to conduct the audit of its fiscal
practices?
The answer to this question may vary
from state to state. Therefore, the locality should
consult with its state on this issue.
G3) Who or what agency will
monitor the effort?
HHS will monitor the fiscal aspects
of the EZ/EC SSBG grants; USDA and HUD will oversee the
programmatic dimensions of the overall EZ/EC program. It
is unlikely that there will be any joint fiscal and
programmatic reports required for this program.
G4) How often will financial
audits be performed?
The federal government requires the
states to perform annual "Single State"
financial audits of federal programs. Individual states
may require audits on a more frequent basis.
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--H. OTHER
H1) Does the HHS "Common
Rule" apply to the EZ/EC SSBG grants?
No. The HHS Common Rule (45 CAR Part
74) does not apply to block grants. The EZ/EC SSBG funds
are distributed through the HHS Social Services Block
Grant program.
H2) Does the federal Davis-Bacon
Act apply to projects financed with EZ/EC SSBG funds?
The Davis-Bacon Act generally requires
that all individuals working on a federally-contracted
project must be paid at least the prevailing wage for
similar work in the locality where the contracted project
is performed.
EZs and ECs that use the EZ/EC SSBG
grant are not federal contractors. Therefore, an EZ's or
EC's use of EZ/EC SSBG funds to finance a specific
project does not make it subject to the David-Bacon Act
requirements.
However, there are several federal
programs -- including, among many others, Community
Health Center grants, Job Training Partnership Act work,
and Low-Income Housing projects -- that require
recipients of their funds to abide by the Davis-Bacon Act
requirements. This could be an issue for an EZ or EC if
it uses EZ/EC SSBG funds to finance a project funded in
part with resources from these other federal programs.
EZs and ECs should consult with an attorney to determine
whether or not their specific EZ/EC SSBG activities are
subject to the Davis-Bacon Act requirements.
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