Aaron Taylor from ACL recently presented updated information to the IL stakeholders at the quarterly meeting. You can find that full call, including his presentation, here. Here are some key highlights:
The changes in 2 CFR 200 can be applied to grantees once they are operating under federal fiscal year 2025. For Part B centers, this is October 1, 2024. For Part C recipients this doesn’t apply until September 30, 2025.
Increase in the de minimus indirect rate. The current de minimus rate indirect cost rate is 10%. This is an indirect cost calculation that does not require the usual negotiation of a specific rate for your center. The new de minimus rate will be 15%, which can be applied on the dates above. (2 CFR 200.414(f)) Note, though, that this is NOT a flat 15% against other costs. (Not now and not in the future.) It only applies to the first $25,000 and certain costs are excluded. In our opinion a negotiated rate is typically more beneficial to the grantee.
Increase in the expenditure threshold for single audits. If a center reaches a specific level of federal spending in a year they are required to have what is called a “single audit”, a specific, deeper look at federal requirements as part of their independent audit, and filing of that audit with the Federal Clearinghouse. (2 CFR 200.501) The current threshold of $750,000 in federal expenditures is being increased to $1,000,000 based on the same starting dates listed above.
A change in what is considered to be equipment. Currently you are required to get prior permission before purchasing equipment that costs in excess of $5,000. That is being increased to $10,000. You are also required to keep an inventory of the equipment and supplies above this threshold and to dispose of them according to federal rules, found in 2 CFR 313(e) and 2 CFR 200.314(a). Note that you may want to keep an inventory of items that didn’t cost this much, to show that you are using the funds properly and to keep track internally of where you have assigned things like computers, printers, tablets and other devices. However, the federal requirements regarding prior approval, inventory and proper disposal of equipment will now start at $10,000.
A change in the procurement rules. You are required to have your own, internal policies and procedures on when and how you make purchases. If you receive state funds, the state may also impact these limits and processes for purchases. When is board approval required? At what expense level do you need cost estimates or bids? When must you have a second signature on checks? That said, the new flexibilities include a new increase in the threshold for “micro-purchases”. These are purchases that do not require a bid process, only an informal review of costs to assure the costs are reasonable. The new level is up from $10,000 to $50,000. (2 CFR 200.320)