Funds Distribution - Background and Policy

Many federal grants contain a ‟match” or ‟cost sharing” requirement that requires State funds be used for a specified percentage of a grant’s spending. For projects funded by a federal grant(s), on-boarded agencies will utilize the Funds Distribution process to automatically allocate the funding source for a given project between State and Federal funds. On-boarded agencies will need to establish the Funds Distribution rules for every project they administer, regardless of whether there is a match requirement. The agency will charge the Federal funding source at the time of the expenditure transaction, rather than split the cost between Federal and State funding sources. Matching State funds will be automatically applied at the time of cost-collection into Project Costing. The funds distribution process will then credit the Federal funding source and charge the State funding source based on the business rules for the Federally-funded project, as defined by the agency. The Funds Distribution process will automatically create General Ledger journal entries to redistribute the expense transactions. These journal entries will also restore the Federal funding budgets and charge the appropriate State matching funds budgets. The reclass journal entries will not be generated if the resulting journal entry would fail for budgetary control issues or incorrect chartfield combinations. The charges to the Federal funding source are then captured in the billing process.

At the time of on-boarding, agencies will be given the opportunity to request a budget tolerance if they plan to use the cost allocation functionality and can demonstrate a need. All requests for budget tolerances on project budgets are subject to OSC approval. Requests should be sent to [email protected]. It is the agencies’ responsibility to monitor all project budget levels and investigate and timely resolve any overspent budgets. These transactions should be temporary in nature and should not remain against an overspent project budget or grant amount that cannot be billed.

The accounting rules for Funds Distribution are determined by the agency’s grant program administrator, and will be requested by the agency and implemented by SFS. The chartfields for the State matching funds are determined by the agency, and are specific to the Project and Activity. Funds Distribution will be configured for each eligible Project/Activity combination based on specific sharing percentages, and will include funding limits to control spending.

The Funds Distribution process is intended to be applied to all expenditure transactions. Vouchers, GL journal entries, employee expense reports, and payroll source transactions can all be redistributed. However, an agency may not require every transaction to be redistributed. In some instances, such as correcting journal entries or Fringe Benefit payments, the transaction may not need to be subject to Funds Distribution. In these cases, the user is able to override the automatic splitting of costs through entry of a specific project Resource Type. When the project Resource Type is entered on the transaction the funds distribution does not allocate the transaction.

Resource Types: Examples of resource types used for Funds Distribution

Agency program grant managers must monitor their Funds Distribution transactions to ensure that all transactions are generating correctly, that budgets are not exceeded or lapsed, and grant billing limits have not been exceeded. Errors in Funds Distribution processing will prevent the transaction from posting properly and generating the billing to the Federal government for funds reimbursement. Any processing errors must be addressed immediately by the agency.

Guide to Financial Operations

REV. 03/09/2022