Debt Ceiling, Cuts, and the Impact on the Nonprofit Arena

The Chronicle of Philanthropy has deciphered what all the new legislation means for nonprofits and summarizes it in a helpful way that cuts out all of the “legalese”. The bill would require Congress to cut $900 billion in spending now with an additional $1.5 trillion cuts by December of this year. The debt ceiling portion of the legislation does not change the value of charitable deductions, however, that could still come to pass with Congress searching for cuts by December.

According to Recovery.gov Congress signed into legislation the American Recovery and Reinvestment Act (ARRA) on February 17, 2009. As of June 30, 2011, ARRA  has paid out $152 billion in funds with another $112 billion in funding awarded. Education programs received the most funding with $83 billion: energy and environmental causes come in third with $26 billion. The District of Columbia has been awarded $5.4 billion as of June 30, 2011, of which $2.8 billion is in grants. Virginia has been awarded $6.3 billion with over $4 billion in grants. Maryland has been awarded $6.3 billion of which over $4 billion is in grants.

The new agreement doesn’t detail what programs will be cut. The Chronicle states that “experts predict that few social or arts programs would be spared.” Hopefully, what was awarded in 2009 will have allowed nonprofit groups to strengthen themselves and brace against upcoming cuts. This congress may well be remembered for its “here ya go! PSYCH!” legislation above anything else.

Reporting Jobs Created by Recovery Act Funds

The U.S. Office of Management and Budget has released updated Recovery Act guidance concerning jobs counting and data quality.  Recipients of Recovery Act contracts, grants, and loans are required to report quarterly on the number of jobs paid for with Recovery funds.  The method or formula for calculating jobs was simplified after the first round of recipient reporting.  The guidance makes two very important changes concerning jobs calculation:

• Simplification of jobs calculation: Total hours worked in jobs funded by ARRA divided by total hours in a full-time schedule (520) for the quarter
• Quarterly, not cumulative, reporting: Jobs are to be reported on a quarterly – not cumulative basis. (Other 1512 reporting such as for expenditure data remains on a cumulative basis.)

For more details see the Updated Guidance on the American Recovery and Reinvestment Act – Data Quality, Non-Reporting Recipients, and Reporting of Job Estimates

LAID OFF EMPLOYEES CATCH A BREAK, COBRA 65% PREMIUM SUBSIDY EXTENDED

President Obama recently signed a new law extending the COBRA subsidy that was previously enacted by the American Recovery and Reinvestment Act of 2009.

Under ARRA, employees that are involuntarily terminated and lose employer-sponsored health insurance between September 1, 2008, and December 31, 2009, are eligible for the subsidy. Employees that are involuntarily terminated for gross misconduct are not eligible for the subsidy.  Subsidy eligible employees are responsible for only 35% of their COBRA premiums. Employers are initially responsible for the remaining 65%, but have these amounts refunded as a credit when payroll taxes are remitted.

The new law extends the cut-off date by two months until February 28, 2010, and extends the eligibility period from nine months to fifteen months.

Employers will be responsible for providing notices to laid-off workers. This includes workers that previously lost the subsidy who will now have additional time to pay the reduced premium.

For additional information or assistance please contact Mark Flanagan of Aronson & Company’s Benefit Plan Services Group at 301-231-6257.

Failure to File Stimilus Reports Results in Penalty

Failure to file the required Stimulus Reports or even filing them late will now subject the contractor to penalties ranging from “public embarrassment” to being ineligible to receive future Federal funds. The new stimulus reporting guidelines are set forth in a Office of Management & Budget memorandum dated November 30, 2009. The OMB memo directed all Executive Agencies to submit a list of all non-compliant recipients to OMB by December 4, 2009. Apparently the list of non-reporting recipients will be displayed on the Recovery.gov website. In addition, the Agencies must reach out to the non-compliant recipients to (1) re-request the reports, (2) provide any required technical assistance, and (3) warn the contractors of that there will be consequences for continued non-compliance. Consequences will include a negative past performance report and could include termination of the funding or even being deemed ineligible to receive future Federal funds.

Being Prepared for Stimulus Funds

Be aware that your accounting system is likely to be subject to pre-award and annual audits from DCAA and other agencies if your company is planning on capitalizing on stimulus money by moving into the government sales arena. Join Aronson & Company on September 16th to learn more about the specialized accounting rules and procedures that your organization will be required to comply with. Topics at this event will include:

• Proper segregation of direct cost from indirect costs
• Identification and accumulation of direct costs by contract
• Allocation of indirect costs to intermediate and final cost objections
• Timekeeping systems that identify employees’ labor by intermediate and final cost objections

The stimulus package has created a myriad of opportunities for committed and well-prepared organizations, so make sure you don’t overlook this important part of doing business with the government. RSVP today!

Accessing Recovery Funding

The American Recovery and Reinvestment Act (ARRA) is the economic stimulus legislation projected to funnel approximately $787 billion in funding to save and create jobs, improve the economy, and invest in education and medical research. The funding is allocated towards tax relief, state and local relief, and education, energy, health, science and infrastructure development. This is accomplished through federal and state grants and contracts.  The Act and its funding objectives may leave many nonprofit organizations wondering how to tap into this money and whether or not a smaller organization can even get access. Continue reading »