As the White House Office of Management and Budget wades into the thorny question of how federal grantees track their employees’ labor, its proposal on that issue—separate from action on the same subject by the U.S. Department of Education—is facing some influential resistance.
The process at issue—formally termed “time distribution” but more often called “time and effort"—has particular pertinence for state departments of education and school districts. It is the single biggest source of K-12 audit problems found by the U.S. Department of Education’s office of inspector general and a perennial cause of complaints about administrative burden.
But not everyone approves of the OMB’s proposed solutions, outlined Feb. 1 in the Federal Register. Among the 319 comments submitted in response to the proposal, one stands out for its strong opposition to the proposed revisions: a document submitted by a working group of federal inspectors general that may carry as much weight as all the other comments combined.
That group’s opposition is significant, said Leigh Manasevit, a founding partner of the education law firm of Brustein & Manasevit, based in Washington, which frequently defends education agencies in cases arising from audits by such officials. “I think there is a good chance that this results in major revisions [of the proposed OMB guidelines]—up to and possibly including a reissue with a new comment period,” he said.
Grant-Management Guidelines
The OMB proposes to overhaul the rules governing time and effort as part of a sweeping revision and consolidation of the agency’s governmentwide guidelines for management of federal grants. As a component of the president’s office, the OMB sets regulatory procedures and standards for the rest of the executive branch.
For more on a new record-keeping option intended to simplify the tracking of the “time and effort,” read, “Ed. Dept. Offers Leeway on Clock-Related Red Tape.”
The OMB proposes to eliminate the monthly time logs now required of many grantees’ staff members and instead require federal agencies to accept annual after-the-fact certifications stating the percentage of time that grant-funded employees spent on various programs.
But the changes do not appeal to the inspectors general. “The proposed changes to labor effort reporting requirements—especially those relating to the standards for documentation of personnel expenses—would seriously undermine our community’s ability to identify and question unallowable and even fraudulent charges,” the Council of Inspectors General for Integrity and Efficiency Grant Reform Working Group wrote in a 70-page comment filed June 2.
Although time-and-effort issues constitute a central complaint, the inspectors general also object to a host of other OMB proposals that they say would weaken controls, such as classifying computers as “supplies” rather than “equipment” and raising the threshold for grantees to conduct mandatory audits to $750,000 in federal expenditures, from $500,000.
A key objection is a proposed shift from documenting actual time spent on a grant-eligible activity to a bare statement that an employee was paid in proportion to the time spent on a given grant.
The inspectors general also believe that a year is too long for employees or their supervisors to actually identify what percentage of their time they spent on various programs.
Influential Voices
In the end, the elimination of monthly time logs and other documentation “appears to leave determinations of allowable labor-effort charges up to the recipient, and not the federal awarding agency,” asserted the working group.
As independent federal watchdogs embedded in—but not answerable to—executive-branch departments, the IGs have considerable latitude to set their own standards of accountability within the framework of federal regulations and issue audit findings based on those standards (although the parent departments may accept, modify, or reject their suggested remedies). Their opinions carry immense weight.
Officials at the OMB have targeted December for the release of the final guidance, with the hope that federal agencies would adopt it in time for it to be implemented by the start of the next state and local fiscal years, on July 1, 2014.
But Mr. Manasevit said that federal agencies have a full year to incorporate OMB guidance into their own regulations, so a more realistic implementation date is July 1, 2015—if the objections of the inspectors general do not force a complete rewrite by the OMB.
