Oregon

States are required to provide, from non-federal sources, 25% of the total amount of funds expended for adult education and literacy activities in the State in order to meet the section 222 match requirement under WIOA.  According to the Uniform Guidance, matching has several requirements, including being necessary and reasonable for accomplishment of program objectives and not being used as a contribution for other federal awards.  In addition, WIOA and the Uniform Guidance have requirements for allowable expenditures and activities.  Finally, the Uniform Guidance requires written procedures for managing federal grant and matching funds, including procedures to determine the allowability of costs.

In a review of the State’s PY 2019 and 2020 FFRs, HECC reported 85.71% and 87.11% match, respectively, which the State indicated came from local funds.  HECC indicated that in addition to the Oregon Adult Basic Skills Title II Adult Education and Literacy Grant Policy Manual, HECC provided extensive training to local programs to ensure the programs were adhering to match requirements and also conducted monitoring for risk assessment and program improvement of selected local programs, in which fiscal monitoring periodically took place.  However, in document reviews and interviews with State staff, the federal review team was unable to determine that HECC could verify that the matching funds reported by local providers to HECC were expended on allowable adult education activities.

HECC must adopt procedures to review expenditures to ensure compliance with matching and MOE requirements and train staff and local providers on the procedures.  HECC must put in place procedures and appropriate tracking of cash and in-kind contributions from local programs for matching and MOE for the AEFLA program.  In addition, HECC must review the recipient share expenditures reported on the PY 2022 final FFR and all subsequent reports to ensure compliance with matching and MOE requirements. 

The management of the American Job Center network is the shared responsibility of States, Local Workforce Development Boards (LWDBs), elected officials, the six WIOA core program partners, required one-stop partners and other additional one-stop partners, American Job Center operators, and service providers.  The Memorandum of Understanding (MOU) is an agreement developed and executed by the LWDB and the one-stop partners, and the infrastructure cost funding agreement, which supports the one-stop delivery system, is a component of the MOU.

States are required to report one-stop infrastructure cost expenditures on the annual FFR submitted to OCTAE.  The Oregon Adult Basic Skills Title II Adult Education and Literacy Grant Policy Manual, developed by HECC, contains policies, procedures, and program information for the title II program, including guidance to local programs on cost sharing related to contributing to infrastructure costs, career services, and shared operating costs for required one-stop partners.  The State Policy Manual and sample IFAs had extensive detail on relative benefit and proportionate use, as well as that the IFA costs were to be allocated among the local one-stop partners.  Additionally, as part of the State’s Budget Workbook, HECC required that each WIOA title II grantee reserve 1.5% of federal funds for WIOA cost-sharing as part of their budget submission process.  In a review of local budgets and interviews with State staff, the review team discovered that local programs were including WIOA cost-sharing amounts in their proposed budget requests and in the infrastructure and additional shared cost funding agreement, but HECC was reporting $0 on the most recent FFRs reviewed.  The State is required to report local infrastructure cost expenditures on the final FFR, however, at the time of the review HECC did not have a process in place to ensure infrastructure cost expenditures were being reported on the FFR.  HECC must create procedures to report infrastructure cost expenditures from local adult education providers and ensure that local providers are trained on these procedures.

HECC reported an incorrect restricted indirect cost rate of 20.28% for the period from 7/1/2020 - 6/30/2021 on its final FFR for PY 2020.  The correct rate for that period was 17.52%.  The rate of 20.28% was correct for the second indirect cost row on the FFR, covering the period from 7/1/2021 - 6/30/2022.  HECC must report the correct restricted indirect cost rate on the initial FFR for PY 2022 and the final FFR for PY 2021, if any indirect costs are charged.

States are required to allow local providers to charge indirect costs as part of local administrative costs.  AEFLA is a program that provides federal funding to "supplement and not supplant" other State or local funding; therefore, local providers must use a negotiated restricted indirect cost rate if they choose to charge indirect costs.  HECC incorrectly set indirect costs at 0.4% of federal funds for all subrecipients, which does not comply with the Uniform Guidance or EDGAR.  Additionally, as part of the State’s Budget Workbook, HECC stated, “Indirect Costs must be equal or less than 0.4% of federal funds.”  In 2019, HECC received an email from OCTAE providing technical assistance in response to the State’s question about indirect costs in local provider budgets.  Although the nucleus of OCTAE’s email appears to be technically correct, it abridged certain concepts of indirect costs and may have yielded an unintended misinterpretation.  HECC must revise and issue its indirect cost policy to inform local providers about the allowability of charging indirect costs, using a restricted indirect cost rate.

As set forth in section 233(b) of WIOA, an eligible provider may negotiate with the State when the five percent in the statute is too restrictive to allow for local administrative activities in order to determine an adequate level of funds to be used for noninstructional purposes.  The State is required to review the local provider’s request and supporting materials and engage in negotiations with the local provider.  After completing the negotiation process and reviewing the additional requested costs for compliance with the requirements for cost allowability in 2 CFR § 200.403, the State determines if there are funds available to increase the amount of funds made available for noninstructional purposes in section 233(a)(2).  A review of the State’s budget documentation revealed that HECC restricted additional funds above the five percent for noninstructional purposes to be used exclusively for accountability activities, program improvement, or contributing to the infrastructure costs of the one-stop.  Although the State may articulate certain operational priorities during its negotiations with local providers, section 233(b) does permit States to impose limitations on the types of noninstructional costs identified in section 233(a)(2) in advance of the negotiation process.  The State must ensure that its policies for negotiating administrative cost percentages above five percent are consistent with the statute and program regulations.