3. Basic Grants Management Principles

Obligation and Liquidation Periods

Based on the Federal regulations at 45 CFR 92.23 and 98.60(e), where a funding period is specified, a grantee may charge only allowable costs resulting from obligations incurred during the funding period for the award. Funding period refers to the period of time that Federal funds are available for obligation. An obligation is defined as a legally binding agreement between two parties for purchase of services, supplies, or equipment. Examples include purchase orders and contracts. Liquidation means the issuance of payment for an obligation.

When submitting financial reports, the grantee must be able to provide information related to the unobligated balance of Federal funds and the unliquidated balance. The unobligated balance is defined as the portion of the funds authorized by the DHHS awarding agency that has not been obligated by the grantee, and is determined by deducting the cumulative obligations from the cumulative funds authorized. The unliquidated obligations are those obligations which have not yet been paid.

The programs under discussion in this document have different funding periods which are defined in the applicable regulations, and noted below:

CCDF:

The Tribal Child Care (CCDF) program grantees have a two-year obligation period with an additional one-year liquidation period, with the exception of construction awards which have a three-year obligation/liquidation period.

TANF:

Tribal TANF funds do not necessarily need to be obligated by the end of the funding period. A Tribe may reserve amounts awarded to it, without fiscal year limitation, to provide assistance under the Tribal TANF program. It may expend funds beyond the fiscal year in which awarded only on benefits that meet the definition of assistance at Sec. 286.10 and administrative costs directly associated with providing that assistance.

Tribal TANF grantees need to obligate current year funds on non-assistance activities before the end of that current fiscal year. Current year funds that are obligated by the end of the current fiscal year may be carried into the succeeding fiscal year to pay for those non-assistance activities. But, if those funds are not liquidated by the end of the succeeding fiscal year, then any remaining funds would be de-obligated and carried into the next fiscal year to use only to provide "assistance" and pay for any administrative costs directly associated with providing that "assistance." For example, if the Tribe obligated current year funds by September 30 of that fiscal year to pay for non-assistance activities, the Tribe would have an additional fiscal year (the immediately succeeding fiscal year) to liquidate those funds. Any current year funds not obligated by September 30 of that year must only be used in immediately succeeding fiscal year to provide "assistance" (and administrative costs related to that "assistance"). Tribes may read relevant principles expressed in TANF-ACF-PI-2002-02, dated May 23, 2002, regarding Clarification of Procedures and Methods of Obligating Federal Funds under the TANF program at http://www.acf.hhs.gov/programs/ofa/policy/pi-ofa/2002/pi2002-2.htm.

<< Previous Page | Table of Contents | Administrative Costs >>