Sneak Preview: NIFA To Develop Capacity Grant Allocation Guidance

Jerry Ashworth
September 6, 2019 at 07:36:44 ET
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(The following was excerpted from a recent article in the Single Audit Information Service.) The U.S. Department of Agriculture (USDA) National Institute of Food and Agriculture (NIFA) plans by the end of the year to develop guidance to better assess its capacity grant allocation methodologies for federal fiscal year (FY) 2021 awards and beyond, in response to recommendations in a recent USDA Office of Inspector General (OIG) audit that found concerns about misallocated funds under the capacity grant programs.

OIG reviewed nine of NIFA’s 16 capacity grant programs and statutory requirements for FY 2015 to determine whether the agency had appropriate internal controls over the funding allocations. Capacity grants help participating research institutions conduct agricultural research by providing noncompetitive awards to states or institutions based on predetermined formulas established by Congress. The formulas are based on data such as state and national-level rural and farm populations, amounts of timber harvested or a statewide capacity to perform research. In FY 2015, NIFA’s overall award budget totaled $1.44 billion, $778 million of which was obligated to NIFA’s capacity grant programs.

OIG noted, however, that for FY 2015, NIFA did not accurately allocate about $7.1 million in funds appropriated under six of the nine capacity programs OIG reviewed. Such funds appropriated by Congress are divided between NIFA, which receives funds to administer the program, and participating states or institutions, which receive funding to conduct research and extension activities. OIG found that under the Hatch Act Research programs (Regular Research and Multistate Research), for example, NIFA retained $18,000 more than it was entitled to spend for administrative fees rather than allocating it to institutions for research. Conversely, for the Smith-Lever 3(b) and (c) program, NIFA retained $3.6 million less than it was entitled for administrative expenses, thus violating federal laws by allocating these funds dedicated for administrative purposes for extension purposes.

Further, NIFA distributed funds incorrectly among participating institutions within certain programs. For example, in the Evans-Allen Research program, NIFA overpaid one institution by about $405,000 and underpaid another institution about $865,000. It also improperly waived a matching requirement under the McIntire-Stennis Cooperative Forestry Research program, resulting in an overpayment to one institution of about $66,000. OIG said that if these questioned costs made to institutions cannot be discharged under the agency’s grant rules, NIFA should recover the overpayments from the awardee institutions.

When OIG asked NIFA to explain the reason for the miscalculations, agency officials could not provide adequate documentation of the validation process for its computations. “We determined that NIFA did not identify its incorrect funding allocation calculations due to the lack of policy or formal procedures in place to require a review of fund distribution calculations,” OIG explained. “While NIFA conducted informal supervisory reviews to verify computations in spreadsheets, we found these reviews did not analyze all components of the formulas, nor verify that NIFA staff used the correct formulas in its calculations.

(The full version of this story has now been made available to all for a limited time here.)

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