Funding and Disbursements

FY 2012 Federal Grants Distribution - Update

April, 2011

Earlier this year the ISBE announced a major policy change that will impact the way Federal grant dollars are distributed to all local education agencies (LEAs) beginning in FY 2012.  The policy change was in response to findings issued by the Federal Office of Inspector General (OIG) during an audit of ISBE’s internal controls and cash management procedures for funds distributed under the American Recovery and Reinvestment Act (ARRA) as well as non-ARRA programs.   In February 2010, the OIG issued a final audit report which stated, among other concerns, that “ISBE’s system of internal control is not adequate to ensure LEAs are complying with Federal cash management requirements.”

The OIG cited the Education Department General Administrative Regulations (EDGAR) at 34 C.F.R. § 80.21 which prescribes the standards under which grantees (e.g. ISBE) make payments to subgrantees (e.g. LEAs).  “Grantees and subgrantees shall be paid in advance, provided they maintain or demonstrate the willingness and ability to maintain procedures to minimize the time elapsing between the transfer of the funds and their disbursement by the grantee or subgrantee.  Reimbursement shall be the preferred method when the [Advance] requirements are not met.” The OIG recommended that the Assistant Secretaries for various Federal agencies require ISBE to “strengthen procedures for monitoring excess cash balances at LEAs before approving cash disbursements.”

An initial webinar was conducted on January 13, 2011 to provide an overview of the OIG findings and outlined a proposal to change ISBE’s Federal grant distribution method beginning in FY 2012 Since the webinar, ISBE staff have incorporated stakeholder input with regard to the Traditional Reimbursement model that was considered for some of the larger Federal programs. These concerns prompted ISBE to group all Federal programs under a Modified Advance Reimbursement model.  ISBE is finalizing details of the new process which we believe balances the priority to resolve the findings by the OIG and the financial concerns of LEAs. 

A follow-up webinar is scheduled for Thursday, May 5, 2011, from 2-3 p.m. to update the details of the FY 2012 Federal reimbursement process.  A question and answer session will follow.  You may register at

The Modified Advance Reimbursement model gives LEAs flexibility in that it combines the features of the preferred Traditional Reimbursement method (i.e. receiving payments through a cumulative expenditure report) but allows LEAs the option of an advance payment (i.e. requesting a month end advance payment that is expected to be fully expended by the end of the next month).

All cumulative (i.e. year-to-date) expenditures and requests for payment under the Traditional or Modified Advance reimbursement model described below will be reported using the Electronic Expenditure Reporting System in IWAS.

Both Methods:

Traditional Reimbursement Method – Preferred:

Modified Advance Reimbursement Method – Optional:

If you have immediate questions, please contact Kim Lewis at, Marj Beck or Sally Cray at in the Division of Funding and Disbursement Services at 217-782-5256.