Minnesota Department of Transportation

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MnDOT Policies

Grant Management

MnDOT Policy FM020
View/print signed policy (PDF)

Policy statement

The Minnesota Department of Transportation (MnDOT) will comply with:

when applying for, receiving, using, awarding, administering, monitoring, and closing out grants. Together, these policies and regulations will form the agency framework for all grants, reducing risk to MnDOT and providing oversight of subrecipients/grantees.

MnDOT will not extend certain 2 CFR part 200 requirements to state-funded only grants (e.g., Procurement Standards Part 200.317-200.326, Appendix II Contract Provisions for Nonfederal Entity Contracts Under Federal Awards, and Record Retention Part 200.333-200.337). It is not the intent of this policy to impose undue cost on grant programs funded solely with state funds. Only those requirements that reduce risk to MnDOT and provide oversight of grantees, which are specifically called out in this policy, will apply to state only funded grants.

Reason for policy

MnDOT must protect and promote public trust, confidence, and achieve the program objectives in all grant programs it administers.

This policy establishes uniform standards applicable to all MnDOT grant programs and grant agreements to ensure integrity, accountability, and to ensure that legal and financial risks are mitigated.

Note on terminology used in this policy

Throughout this policy:

  • Employee means any MnDOT employee responsible for carrying out the requirements of this policy and accompanying procedure. An “employee” includes a person in any position who is actively involved with or has program responsibility in any aspect of the grants lifecycle at MnDOT;
  • Grant Coordinator means a designated employee with grant management authority and responsibilities as outlined in this policy. This position may be located in a program office or in the Office of Financial Management (OFM) Grant Unit. The designation of Grant Coordinator is recommended by the program Office Director (if located in the program office) and is subject to the concurrence of the OFM Director or their designated OFM staff;
  • Grantee means an entity that receives a grant funded only with state or other non-federal dollars;
  • Grantor means an entity that provides a grant funded solely with state or other non-federal funds to a recipient;
  • Non-federal entity means a state, local government, Indian tribe, institution of higher learning, or non-profit organization that carries out a federal grant award as a recipient or subrecipient;
  • Pass-through entity means a non-federal entity that provides a sub-award to a subrecipient to carry out part of a federal program;
  • Recipient means a non-federal entity that receives a federal award directly from a federal awarding agency to carry out an activity under a federal program. Recipient does not include “subrecipient.” Recipient also means an entity that receives state grant funds only (a recipient of state-only grant funds may also be referred to as a “grantee”);
  • Subaward means an award (of funds) provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of the federal award received by the pass-through entity; and
  • Subrecipient means a non-federal entity that receives a subaward from a pass-through entity to carry out part of a federal program;

Additional definitions used throughout this policy are located at the end of this document.

Who needs to know this policy

  • Supervisors and managers of employees responsible for any part of the activity identified in this policy.
  • All employees involved in any step in the grant management life cycle.

How this policy is organized

This document is organized in chronological order and sets expectations for managing grants. This policy applies to all grant fund types, whether incoming or outgoing, and whether used directly by MnDOT as a recipient or subrecipient or awarded by MnDOT (as a pass-through entity or grantor) to a subrecipient/grantee.

There are four phases in the life cycle of a grant. The Grant Management Procedure Manual includes detailed process and procedures for the requirements listed below.

  • Phase 1: Grant fund application requirements
  • Phase 2: Pre-award
  • Phase 3: Post-award
  • Phase 4: Closeout

Each phase is further categorized by the grant purpose and the grant funding type to aid in determining which section applies to each grant situation.

Grant purpose is defined as follows:

  • Purpose A: MnDOT as a recipient, subrecipient/grantee of grant funds to be used for MnDOT internal purposes.
  • Purpose B: MnDOT as a provider of grant opportunities to a subrecipient or grantee.

Grant funding types are as follows:

  • Funding Type 1: Federal funded grants (only)
  • Funding Type 2: State funded grants (only)
  • Funding Type 3: Grants funded with a combination of state and federal funds (may have other funding as well)
  • Funding Type 4: Other - not specific to Funding Types 1-3 above, but qualify as grant funds (e.g. grants funded by private foundations)

Phase 1 - grant fund application requirements

1. Notify the Office of Financial Management (OFM), Grant Supervisor or their OFM designee prior to applying for grant funds.

Grant Purpose: All (A & B)
Grant Funding Type: All (1-4)

A. An employee who intends to apply for a grant must provide written notification to the OFM Grant Supervisor or their OFM designee prior to submission of the application.

B. Any member of the Grant Planning team may convene a grant planning meeting. This meeting will include designated representatives of the program area, the OFM Grant Supervisor or their OFM designee, OFM Budget staff, Grant Coordinator, and the Office of Transportation System Management (OTSM), Programming & Performance Management (PPM) Unit as necessary. The purpose of the meeting is to verify eligibility, review the grant opportunity, complete the MnDOT Grant Planning checklist, determine whether or not to apply for the grant opportunity, and determine the following:

  1. Legal Authority to apply for and carry out the grant;
  2. Match determination and funding source; and
  3. Alignment with applicable plans.

C. The program area is responsible for writing, compiling, and submitting the grant application (as applicable). The program area must notify the OFM Grant Supervisor or their OFM designee in writing when the application is submitted.

D. A Grant Coordinator must review and submit all grant applications via applicable system (e.g., www.grants.gov, etc.) and is responsible for communicating with the Grant Planning team the grant application and award status.

E. All grant award notifications must be sent to the OFM Grant Supervisor or their OFM designee.

2. Notify the Office of Financial Management (OFM), Grant Supervisor or their OFM designee prior to receiving ongoing program grants.

Grant Purpose: All (A & B)
Grant Funding Type: All (1-4)

A. The written notification to the OFM Grant Supervisor or their OFM designee must address the following:

  1. Legal Authority to carry out the grant; and
  2. Match Determination and Funding Source.

B. The program area is responsible for writing, compiling and submitting the grant application (as applicable). The program area must notify the OFM Grant Supervisor or their OFM designee in writing when the application is submitted.

C. All grant award notifications must be sent to the OFM Grant Supervisor or their OFM designee.

Phase 2 - pre-award requirements

3. Understand and implement ethical requirements.

Grant Purpose: All (A & B)
Grant Funding Type: All (1-4)

A. Employees must follow the MnDOT Code of Ethics Policy.

B. Employees must comply with Minnesota Statutes 43A.38, Code of Ethics for Employees in the Executive Branch.

C. Employees must make reasonable efforts to avoid, mitigate, or neutralize organizational conflicts of interest that may arise during the procurement process, as required by state law, Minnesota Statutes 16C.04, Ethical Practices and Conflict of Interest. An employee involved in grant management must contact the Office of Chief Counsel, Contract Management Section if a subrecipient/grantee discloses, or the employee believes a subrecipient/grantee may have, an actual, potential, or perceived organizational conflict of interest. If the Office of Chief Counsel, Contract Management Section determines that a conflict of interest may exist, the employee must implement the Office of Chief Counsel, Contract Management Section’s directives to avoid, neutralize, or mitigate the conflict.

4. Understand and implement grant business process internal control requirements.

Grant Purpose: All (A & B)
Grant Funding Type: All (1-4)

A. All employees must participate in establishing and following appropriate internal controls to provide reasonable assurance that the management of the grant award complies with state and federal statutes, regulations, intent of funding, and the terms and conditions of the grant award. All employees must comply with established internal controls.

B. Internal controls must comply with the guidance in Standards for Internal Control in the Federal Government (The Green Book) issued by the Comptroller General of the United States, the COSO Internal Control Framework, and as adopted by the State of Minnesota as the State’s internal control standard in MMB Statewide Operating Policy 0102-01, Internal Control Systems.

C. Employees must take prompt action when an instance of noncompliance is identified. Non-compliance may be identified during financial reconciliation, audit, or grant monitoring. All findings must be addressed promptly.

D. Employees are responsible for complying with the Minnesota Data Practices Act, protecting non-public data, and protecting data designated by the federal awarding agency as sensitive personally identifiable information. Personally identifiable information means information that can be used to distinguish or trace an individual’s identity either alone or when combined with other information.

5. Understand and comply with the requirements for publicizing grant opportunities, and rate grant applications and proposals according to established criteria.

Grant Purpose: B
Grant Funding Type: (All) 1-4

A. Provide Notice

  1. Public notice and competition is not required when legislation directs the award of a grant to a specific subrecipient/grantee, or when the grant is a single source or sole source grant in accordance with the OGM Policy 08-07, Single and Sole Source Grants.
  2. The program office must post notices of grant opportunities (or links to information on MnDOT websites) on the OGM MN Grants website. This includes grant programs that are open to continuous or recurring applications.
  3. The program office must also post notices (or links to information on other MnDOT websites) on the OFM Grant website.
  4. Program offices may also provide additional notice. Program/Project Managers should consider additional advertising methods to reach potential subrecipients/ grantees including: directly notifying prior subrecipients/grantees, U.S. mail, email, agency distribution list, and newspapers/websites targeted to specific communities.
  5. For open competitive grants, the Program/Project Manager must use a grant solicitation template approved by the Office of Chief Counsel, Contract Management Section.
  6. At a minimum, notices of grant opportunities and Requests for Proposals (RFP) must include information about the grant program, application evaluation criteria, planning and programming criteria, application and proposal requirements, MnDOT contacts and grant reporting requirements.

B. Use established procedures and rating criteria to review grant applications/proposals

  1. Employees must ensure equal opportunity and consideration is given to both new and repeat applicants through fair, accurate, and consistent evaluation of each grant application and proposal.
  2. The competitive grant application, proposal review criteria, and standardized scoring system should be clearly articulated prior to receipt of applications. The notice of grant opportunity or RFP must provide the applicant the work requirements and evaluation criteria.
  3. For ongoing program grants the program office must ensure the grant funds are distributed according to the approved distribution formula, or the applicable planning and programming criteria.

6. Determine subrecipient or contractor relationship and perform a pre-award risk assessment on potential subrecipients/grantees.

A. Obtain a subrecipient or contractor determination (when entering into grant agreements with external parties)

Grant Purpose: A & B
Grant Funding Type: 1, 3, or 4 (only for grants funded in whole or in part with federal funds)

  1. MnDOT must make a subrecipient/contractor determination for each contract, because a single entity may concurrently receive federal awards as recipient, a subrecipient, and a contractor, depending on the substance of its grant agreements with federal awarding agencies and pass-through entities.
  2. For each grant opportunity and each subrecipient the Program/Project Manager must initiate the process of determining and documenting, on a case-by-case basis, whether a grant agreement to disburse federal program funds casts the entity receiving the funds in the role of a subrecipient or a contractor.
    1. This determination must be documented by completing the AGA Recipient Checklist for Determining a Contractor or Subrecipient Relationship worksheet.
    2. The Office of Chief Counsel, Contract Management Section will make the final determination if the agreement is a contract or a grant agreement, which is a legal decision. The final decision will be the basis for determining whether the contract is subject to the requirements of the Grant Management Policy or the Contract Management Policy.
B. Perform a pre-award risk assessment

Grant Purpose: B
Grant Funding Type: All (1-4)

  1. The Program/Project Manager must complete a pre-award risk assessment that informs award decisions and determines the appropriate level of subrecipient/grantee monitoring. The level of monitoring will be based primarily on the results of the risk assessment. The pre-award risk assessment reviews the risk of noncompliance with the applicable state and/or federal statutes, regulations and terms and conditions of the award. A MnDOT OFM Grant Supervisor or their OFM designee pre-approved Pre-Award Risk Assessment form or programmatic process should be used to document all subrecipient/grantee risk assessments.
  2. Pre-award risk assessments must be performed for each subrecipient/grantee as follows:
    1. On a per grant agreement basis unless a risk assessment has been done by the same or another MnDOT office within the last 12 months.
    2. Repeat subrecipients/grantees do not require a per grant agreement pre-award risk assessment if a risk assessment has been performed within the last 12 months.
    3. An office may choose to do a risk assessment at any time during the period of performance if it believes the subrecipient/grantee has had a material change since the last pre-award risk assessment was completed.
    4. No risk assessment is required for a grant to an airport if the FAA has performed a risk assessment within the last 12 months or for an extension on the same project.
    5. If the subrecipient/grantee is considered “moderate” to “high” risk then the Program/Project Manager must perform additional monitoring during the period of performance, and must ensure that annual risk assessments are completed on multi-year grant agreements.
C. The Grant Coordinator must review the pre-award risk assessment, proposed work plan and budget

Grant Purpose: B
Grant Funding Type: All (1-4)

  1. The Grant Coordinator (in consultation with the OFM Grant Supervisor or their OFM designee) must review the completed pre-award risk assessment, work plan, proposed budget, and overhead rates (as applicable to the type of grant). This review must occur after the final subrecipient or contractor determination has been validated by the Office of Chief Counsel, Contract Management Section and prior to the grant agreement being executed. This is to ensure accuracy, compliance with applicable state and federal regulations, MnDOT policy, and ensure that MnDOT is not overbilled.

7. Understand legal requirements before entering into a grant agreement.

A. There are statutory requirements for a valid state grant agreements, and oral grant agreements are not enforceable

Grant Purpose: B
Grant Funding Type: All (1-4)

  1. Minnesota Statutes Sections 16A.695, 16B.98, and 16C.05 require the State to use written grant agreements.
  2. Grant agreements are governed by Minnesota Statutes Sections 16A.86, 16B.97 and 16B.98, the 2 CFR Part 200, program specific requirements, all applicable state and federal rules and regulations, and policies issued by the OGM and MMB.
    1. An employee who authorizes or permits work to proceed before funds are encumbered and a grant agreement is signed violates State law, and must complete the 16A/16C violation form.
    2. A grant agreement is not valid and MnDOT is not bound to it until it has been signed by the subrecipient/grantee and MnDOT, and funds have been encumbered in the accounting system. Minnesota Statutes Section 16B.98 Subd. 5 requires that the grant must also contain an effective date, either a specific date or date referencing appropriate statutes.
    3. Minnesota Statutes Section 16B.98 Subd. 11 states that agencies may permit a specifically named, legislatively appropriated, noncompetitive grant recipient to incur eligible expenses based on an agreed upon work plan and budget for up to 60 days prior to an encumbrance being established in the accounting system. If a grant is funded in whole or part with general obligation bond proceeds, MnDOT may permit a grantee to incur expenses prior to encumbrance. Exceptions to be considered under this statute must be reviewed and approved by the OFM Director or their OFM designee.
    4. The Office of Chief Counsel, Contract Management Section and the OFM Grant Supervisor or their OFM designee have the authority to:
      1. Require the Program Office to correct any grant agreement deficiencies, including, but not limited to, deficiencies in the grant agreement verbiage, budget, scope of work, or inappropriate or questioned signatures; or
      2. Reject any grant agreement that does not comply with law, policy, or MnDOT procedures or practices.
B. MnDOT must have legal authority for each grant agreement it enters into

Grant Purpose: B
Grant Funding Type: All (1-4)

MnDOT derives its powers to enter into grant agreements from state and federal law. MnDOT as a state agency does not have “general” grant making authority. The legal authority to enter into a grant agreement must be in the recitals or background section of the grant agreement.

C. Misappropriation of money is prohibited

Grant Purpose: All (A & B)
Grant Funding Type: All (1-4)

No employee may intentionally use money appropriated by law, or fees collected, knowing that the use is for a purpose other than the purpose of which the money was appropriated. An employee who violates Minnesota Statutes 16A.139 Misappropriation of Money, may be found guilty of a gross misdemeanor, unless a greater penalty is specified elsewhere in law.

8. Use an approved template and prepare compliant grant agreements.

A. Drafting MnDOT grant agreement templates is a shared responsibility

Grant Purpose: B
Grant Funding Type: All (1-4)

The Office of Chief Counsel, Contract Management Section is responsible for providing “boilerplate” sections of the grant agreement template and guidance on drafting scope of work and budget sections. Program/Project Managers are responsible for drafting “non-boilerplate” sections of the grant agreement, including the scope of work, deliverables, schedule, and payment sections.

B. The Office of Chief Counsel, Contract Management Section must review and approve grant agreement templates and changes to templates

Grant Purpose: B
Grant Funding Type: All (1-4)

Program/Project Managers should perform an annual review of their templates with the Office of Chief Counsel, Contract Management Section. This review ensures that grant agreement templates are up to date, comply with current laws, statutes, and regulations, and reflect best contract language and best practices.

C. Grant template requirements

Grant Purpose: B
Grant Funding Type: All (1-4)

  1. The grant agreement must:
    1. Be written in plain language pursuant to Executive Order 14-07.
    2. Include a MnDOT contract number (assigned by the CAATS system), in the upper right hand corner.
    3. Correctly identify the parties by their full and correct legal names.
    4. Clearly state all performance requirements.
    5. State that each exhibit is “attached and incorporated into” the grant agreement.
    6. Include liability, indemnification, and insurance clauses, except as otherwise approved by the Office of Chief Counsel, Contract Management Section.
    7. Include specific payment terms and the state audit clause requirements. The following apply to the grant payment and audit clauses:
      1. The grant agreement must identify the payment schedule or identify milestones at which lump sum payments will be made.
      2. MnDOT’s standard practice is to make all grant payments to subrecipients/grantees as reimbursements, rather than as advance payments. Exceptions to this standard practice must be documented detailing the specific need to utilize advance payments and receive approval from the OFM Grant Supervisor or their OFM designee and OFM Budget staff, unless otherwise authorized in state statute or federal regulation.
      3. Where a statute or regulation specifies a payment schedule, the grant agreement must follow the requirements of that statute or regulation.
      4. A grant agreement must contain the audit clause required by Minnesota Statutes Section 16C.05 and as approved by the Office of Chief Counsel, Contract Management Section.
      5. Grant funds should never be used to pay for ineligible expenses.
    8. Include a data practices clause. The clause must notify the other party of the obligations and potential penalties under the Minnesota Government Data Practices Act. If federal funds are used the clause must also notify the other party of the obligations to protect personal identifiable information.
    9. Include required federal clauses (only for federally funded grants). When the grant award involves any federal funds and unless otherwise specified in federal regulation, 2 CFR Part 200 requires the pass-through entity to include specific clauses in the grant agreement with its subrecipient. All federally funded grant agreements must include all the elements identified in 2 CFR Part 200.331, Appendix II to Part 200, and the Procurement Requirements for Subrecipients Part 200.318-200.326.

9. Obtain proper approvals and signatures for all grant agreements, record grant agreement data in the system of record, and retain a copy of each grant agreement and all award supporting documentation per MnDOT Records Retention Schedule.

A. Required signatures

Grant Purpose: B
Grant Funding Type: All (1-4)

Every MnDOT grant agreement must be approved and signed in compliance with this policy. MnDOT grant agreements require the signatures outlined below, and are not fully executed until all signatures are obtained:

  1. Subrecipient/Grantee;
  2. The Commissioner of Transportation, or someone acting for the Commissioner pursuant to a valid delegation of authority;
  3. MnDOT Office of Administration, Business Services to verify encumbrance of funds - except State Aid (all encumbrance verification occurs in Business Services unless it is for the Office of State Aid – these will occur in the Office of Financial Management, State Aid);
  4. OFM Grant Supervisor or their OFM designee, to ensure compliance, completeness, and accuracy; and
  5. The Office of Chief Counsel, Contract Management Section, as to content, form, and execution.
B. Employees must have delegated authority to sign grant agreements

Grant Purpose: All (A & B)
Grant Funding Type: All (1-4)

Employees must determine whether they have authority to take a particular action (such as signing a grant agreement) on behalf of the agency.

By law, the Commissioner and any Deputy Commissioner have the authority to sign MnDOT grant agreements and other documents. The law allows them to delegate this authority as they deem proper. Delegating Authority is a formal process that includes filing an official form with the Secretary of State. Except for the Commissioner and any Deputy Commissioner, employees may sign grant agreements only if they have been specifically delegated the authority to sign grant agreements. When approving grant agreements, the Office of Chief Counsel, Contract Management Section will review the grant agreement to ensure that the MnDOT official who signed the grant agreement has a valid delegation of authority.

C. Political subdivisions must properly document approval of a grant agreement

Grant Purpose: B
Grant Funding Type: All (1-4)

Proper documentation of a grant agreement approval generally consists of a resolution of the governing body approving the grant agreement. The resolution will also designate the local officials authorized to sign the grant agreement. Exceptions to this requirement must be approved by the Office of Chief Counsel, Contract Management Section.

D. Business and non-profit entities must have actual or apparent authority

Grant Purpose: B
Grant Funding Type: All (1-4)

For business/non-profit entities, the person signing must have actual authority by being an officer of the entity, or have “Apparent Authority.” Apparent Authority means that a reasonable person would believe that the person signing the grant agreement had authority to act on behalf of the company. Non-profit entities will generally pass resolutions approving grant agreements. The Office of Chief Counsel, Contract Management Section, will determine apparent authority.

E. Record all grant agreement data in the system of record, and retain a copy of each grant agreement and all grant award supporting documentation to demonstrate achievement of award requirements

Grant Purpose: All (A & B)
Grant Funding Type: All (1-4)

MnDOT has designated CAATS (Contract Agreements Audit Tracking System) as the system of record for all agency contract and grant agreement data. Grant Coordinators are responsible for recording agency grant agreement data accurately and timely into CAATS for all agency grant agreements.

Grant Purpose: All (A & B)
Grant Funding Type: 1, 3 (only for grants funded in whole or in part with federal funds)

All non-FHWA grant agreement financial data must be entered into the SWIFT Grants module by a Grant Coordinator, as this is the state’s financial system of record, and as required by MMB Statewide Policy 0402-02. However, non-FHWA federal funds where MnDOT is a subrecipient of a grant award should not be entered into the SWIFT grant module, as these funds will be entered into the SWIFT grant module by the awarding agency (e.g., DPS).

Additionally, all FHWA grant agreement financial data must be entered into the SWIFT Project Costing module by OFM. All offices are responsible for providing OFM with the required information to enter FHWA grant agreement data into SWIFT.

  1. Minnesota Statutes 16C.05 requires state agencies to retain a fully executed copy of each grant agreement and amendment for the period of time that complies with the most restrictive standard specified in state law, federal regulation, or the MnDOT Retention Schedule.
    1. Minnesota Statutes 325L.12 provides that an electronic record is a valid record when a law requires that a record be retained.
    2. Refer to the MnDOT Records Retention and Disposal Policy and the MnDOT Records Retention Schedule (note: for employees only) to ensure compliance with records management requirements.

Phase 3 - post-award requirements

10. Employees must review and reconcile invoices, make prompt payments, and be alert to fraud, waste and abuse.

A. Employees must review invoices

Grant Purpose: All (A & B)
Grant Funding Type: All (1-4)

Payment requests must correspond to the line items in the approved grant budget. The Program/Project Manager must review each invoice against the approved grant budget, grant expenditures to-date, and the latest grant progress report before approving the payment.

Grant Purpose: B
Grant Funding Type: All (1-4)

Before approving a payment under a grant, including a lump sum payment, the Program/Project Manager must review invoices to ensure that all costs and expenses are correct and proper within the terms of the grant agreement.

Grant payments will not be made on grants with past due progress reports, unless MnDOT has granted the subrecipient/grantee a written extension. Lump sum payments must correspond to the approved payment schedule and the subrecipient or grantee must have met all the requirements to receive that payment.

B. Reconciliations

Grant Purpose: B
Grant Funding Type: 1-4 (for grants totaling $50,000 or more)

The Program/Project Manager must conduct a financial reconciliation at least annually, or more frequently if the pre-award risk assessment indicated a need for more frequent reconciliation. If the grant period of performance is less than one year, at least one reconciliation must be completed during the period of performance. The Program/Project Manager must conduct at least one full financial reconciliation of the subrecipient/grantee’s expenditures to ensure accuracy of billing and compliance with payment terms. Lump sum grants must have a reconciliation completed at closeout. Reconciliations must be conducted in accordance with the approved procedure and based upon the type of grant agreement. All reconciliations must be completed before the final payment is made. This reconciliation requirement does not apply to state bonding or capital grant funds.

C. Prompt payment

Grant Purpose: B
Grant Funding Type: All (1-4)

MnDOT must make prompt payments under grant agreements as provided by state law, (Minnesota Statutes 16A.124) and 2 CFR Part 200.305(b) (3). Minnesota’s prompt payment law generally allows 30 days to pay undisputed obligations, but MnDOT must pay valid obligations in less than 30 days if the federal program requires a shorter period. MnDOT must only pay valid obligations – disputed sums are not valid obligations. If only part of a payment request is disputed, MnDOT must pay the undisputed portion and notify the subrecipient/grantee of the dispute. A subrecipient may charge MnDOT interest on a valid obligation not paid within the required period.

D. Be alert for and report potential fraud and false claims

Grant Purpose: All (A & B)
Grant Funding Type: All (1-4)

Employees involved in approving and paying invoices may encounter costs that appear to be false or inflated. These charges may violate a state law, Minnesota Statutes 15C, also known as the Minnesota False Claims Act. The MnDOT False Claims against the State Policy requires all employees to report suspected violations of the Minnesota False Claims Act to the employee’s supervisor, Office of Chief Counsel, Contract Management Section, OFM Grant Supervisor or their OFM designee, a Grant Coordinator, or by completing MnDOT’s anonymous MnDOT Report of Wrongdoing/Questionable Activity Form (note: this link is for employees only).

E. Cost Principles

Grant Purpose: A & B
Grant Funding Type: 1, 3 (only for grants funded in whole or in part with federal funds)

The cost principles outlined in 2 CFR Part 200.400-475 must be used to determine the allowable costs of work performed by the subrecipient, program related expenditures, and purchases of goods under the federal award. These principles also must be used by the Program/Project Manager as a guide in the pricing of fixed-price contracts and subcontracts where costs are used in determining the appropriate price.

Additionally, it is essential that each item of cost incurred for the same purpose is treated consistently in like circumstances either as a direct or an indirect (Facilities & Administration) cost in order to avoid possible double-charging to the federal awards. Guidelines for determining direct and indirect (Facilities & Administration) costs charged to federal awards are provided in 2 CFR Part 200.413-415.

F. Cost Sharing or matching

Grant Purpose: A & B
Grant Funding Type: 1, 3 (only for grants funded in whole or in part with federal funds)

For all federal awards, all cost sharing or matching funds and all contributions must meet the criteria and program requirements of the award and 2 CFR Part 200.201(b) and 200.306. If a conflict exists between the program requirements and the criteria outlined in 2 CFR Part 200.201(b) and 200.306, the most restrictive requirement must be followed.

G. Program income

Grant Purpose: A & B
Grant Funding Type: 1, 3 (only for grants funded in whole or in part with federal funds)

Under a federal award, MnDOT is allowed to defray program costs where appropriate. All program income must be approved by OFM Budget staff and meet the criteria and program requirements of the award, 2 CFR Part 200.307, and state statute. If a conflict exists between the program requirements and the criteria outlined in 2 CFR Part 200.307 or state statute, the most restrictive requirement must be followed.

H. Grant Period of Performance

Grant Purpose: A & B
Grant Funding Type: 1, 3 (only for grants funded in whole or in part with federal funds)

MnDOT may only charge allowable costs incurred during the period of performance to the federal award (except as described in 2 CFR Part 200.461 Publication and printing costs). The federal awarding agency or pass-through entity must authorize, in writing, any costs incurred before the federal awarding agency or pass-through entity made the award.

11. Use a written amendment for changes in a grant agreement and execute the amendment with a subrecipient/grantee before the grant agreement expires or the change is implemented.

A. Execute an amendment in order to make changes to a grant agreement

Grant Purpose: B
Grant Funding Type: All (1-4)

An amendment is an agreement that makes changes to any term or condition of a grant agreement. Amendments must be in writing and be signed by all parties.

Grant agreements must be amended whenever there are changes to the work required, deliverables required, total obligation, compensation, expiration date, or other terms and conditions. Grant agreement attachments and exhibits may also be revised as part of a grant amendment. The amendment itself must be properly numbered and approved in the same way as the original grant agreement. Contact the Office of Chief Counsel, Contract Management Section prior to executing the amendment to ensure that the draft amendment is in proper form and contains language incorporating the terms and conditions from the original grant agreement.

B. All amendments must be executed before the grant agreement expires (for state and federally funded grants)

Grant Purpose: B
Grant Funding Type: All (1-4)

Amendments to grant agreements must be written and executed before the original grant agreement expires. If the original grant agreement has already expired, a new grant agreement must be prepared. The Program/Project Manager should contact the OFM Grant Supervisor or their OFM designee to discuss this process. Grant agreements amended after expiration is a 16A.15-16C.05 violation and are not allowed by law. Amendments to grant agreements have the same signature requirements as the original grant agreement.
Minnesota Statutes Section 16B.98 Subd. 11 states that agencies may permit a specifically named, legislatively appropriated, noncompetitive grant recipient to incur eligible expenses based on an agreed upon work plan and budget for up to 60 days prior to an encumbrance being established in the accounting system. If a grant is funded in whole or part with general obligation bond proceeds, MnDOT may permit a grantee to incur expenses prior to encumbrance. Exceptions to be considered under this statute must be reviewed and approved by the OFM Director or their assigned OFM staff.

12. Complete all grant performance and financial monitoring, and reporting requirements at the timing and frequency required during the period of performance.

A. Monitoring and reporting program performance

Grant Purpose: B
Grant Funding Type: All (1-4)

The Program/Project Manager is responsible for oversight of the operations through all grant award supported activities. The Program/Project Manager must monitor the award activities to ensure compliance with applicable state and federal requirements and terms and conditions of the grant award, performance expectations, and to ensure the grant is used for its authorized purpose. Monitoring must cover each program, function or activity.
The Program/Project Manager and Grant Coordinator must evaluate and monitor the subrecipient/grantee’s compliance with applicable statutes, regulations and the terms and conditions of award. The Program/Project Manager and Grant Coordinator should confer with the Office of Chief Counsel, Contract Management Section concerning reported or suspected non-compliance with laws, regulations, or the terms of the grant agreement.

B. Performance and financial reporting

Grant Purpose: All (A & B)
Grant Funding Type: All (1-4)

Performance and financial reporting information must be collected with the frequency required by the terms and conditions of the grant award.

C. Revising budget and program plans under the grant award

Grant Purpose: All (A & B)
Grant Funding Type: All (1-4)

The approved budget for a grant award summarizes the financial aspects of the project or program as approved during the grant award process. The budget must be related to performance for program evaluation purposes whenever appropriate. Changes to the budget must be documented by a signed amendment.
For federally funded grants, the Program Manager/Project Manager is required to report deviations from the budget or project scope or objective, and must request prior approvals from the federal awarding agencies for budget and program plan revisions. Increases, decreases, or modification to the budget amount or duration must be reviewed and approved by the OFM Grant Supervisor or their OFM designee (in consultation with OFM Budget staff), and may require additional approval through the legislative authority process, prior to seeking federal awarding agency approval.

D. Reporting on real property

Grant Purpose: All (A & B)
Grant Funding Type: 1, 3, or 4 (only for grants funded in whole or in part with federal funds)

In accordance with 2 CFR Part 200.329 the Program/Project Manager must submit reports as required by the program or federal awarding agency on the status of any real property in which the Federal Government retains an interest. The status reports must be submitted annually, unless the federal interest in the real property extends for 15 years or longer. If the federal interest extends for 15 years or longer, MnDOT may be required by the federal entity to report at various multi-year frequencies (e.g. every two years, every three years, etc.).

E. Asset monitoring

Grant Purpose: All (A & B)
Grant Funding Type: 2, 3, or 4 (only for grants funded in whole or in part with state funds)

  1. If a grantee uses state grant funds (other than bond funds) to acquire a capital asset, the grantee should be required to use that asset for a public purpose for the normal useful life of the asset. The Program/Project manager should establish asset reporting requirements in the grant agreement, and should ensure compliance with those requirements.
  2. Requirements for asset use should be established:
    1. To assure compliance with any statutory requirements specific to the grant program,
    2. To ensure assets are used for a public purpose and not sold or converted to a private purpose; and
    3. To recapture funds, if appropriate, when a grantee disposes of an asset before the end of its normal useful life.

Grant Purpose: B
Grant Funding Type: 2, 3, or 4 (only for grants funded in whole or in part with state funds)

  1. When a grantee uses state bond proceeds (in whole or in part) to acquire or better property, that property becomes “state bond financed property.” State bond financed property can only be disposed of in accordance with Minnesota Statutes section 16A.695, and with the approval of the Commissioner of MMB. Using the bond grant template will ensure that appropriate provisions of Minnesota Statutes section 16A.695 and applicable orders of the MMB Commissioner are incorporated into the grant agreement. Recording a declaration of the bond financing agreement in the county property records is one way to ensure that statutory disposition requirements are followed. If a Program/Project Manager becomes aware that a grantee is selling state bond financed property, they should report the sale or proposed sale to the Office of Chief Counsel. The Office of Chief Counsel will work with MMB, the program office, and any external parties to coordinate the sale process.

13. Complete subrecipient/grantee monitoring and management requirements to comply with all state and federal requirements.

A. Subrecipient/Grantee monitoring

Grant Purpose: B
Grant Funding Type: All (1-4)

The Program/Project Manager must perform subrecipient/grantee monitoring activities during the period of performance that include:

  1. Reviewing financial and performance reports.
  2. Ensuring that the subrecipient/grantee takes timely and appropriate action on all deficiencies detected through audits, on-site reviews, reconciliations, and other means.
  3. Implementing additional monitoring requirements as determined by the pre-award risk assessment.
  4. If monitoring indicates noncompliance by the subrecipient/grantee, then the Program/Project Manager must follow these steps:
    1. Escalate issues to the appropriate management individual (MnDOT and subrecipient/grantee). Follow the chain-of-command to ensure accurate and shared information among all parties;
    2. Consult with the Office of Chief Counsel, Contract Management Section on contractual and other legal options;
    3. Request a plan from the subrecipient/grantee to resolve the performance issue by a specified time; and
    4. Document communications between the subrecipient/grantee and the Program/Project Manager in the grant file.
B. Monitoring visit requirements

Grant Purpose: B
Grant Funding Type: 1-4 (for all federally funded grants and all state funded grants except bond and capital grants)

  1. With the exception of state bonding and capital grants, at a minimum, the Program/Project Manager must conduct monitoring visits as required by OGM Policy 08-10:
    1. At least one monitoring visit per period of performance on each grant over $50,000; and
    2. An annual monitoring visit on each grant over $250,000.
    3. When programmatic requirements specify a more rigorous grant monitoring standard than MnDOT’s policy, the Program/Project Manager must follow the more restrictive requirements of the program, and will still be considered compliant with MnDOT policy.
  2. All monitoring visits must occur and be documented before final payment is made.
  3. Monitoring visits should occur in person whenever possible. But, monitoring visits may be conducted by phone or video conference, only if the subrecipient/grantee provides all the requested and required documentation to the Program/Project Manager for review prior to the phone or video conference date.
  4. A standardized form approved by the OFM Grant Supervisor or their OFM designee should be used for all monitoring visits and procedures so grant management information is tracked consistently.
  5. All monitoring visit documentation must be maintained in the paper or electronic grant file maintained by the Program/Project Manager.

Phase 4 - closeout requirements

14. Perform all grant closeout requirements within the required timeframe at the end of the period of performance.

A. Grant closeout requirements

Grant Purpose: A
Grant Funding Type: All (1-4)

  1. Closeout each grant agreement promptly after the period of performance.

Grant Purpose: A
Grant Funding Type: 1, 3, 4 (only for grants funded in whole or in part with federal funds)

  1. Submit all performance, financial, and other reports as required by the grant agreement and award no later than 90 calendar days after the end of the period of performance or per the terms of the federal grant agreement.
  2. At closeout, all balances of unobligated cash must be promptly refunded that the federal awarding agency or MnDOT paid in advance or paid and that are not authorized to be retained for use in other projects as is required by OMB Circular A-129 and Part 200.345 Collection of amounts due. Additionally, consistent with the terms and conditions of the federal award, the Program/Project Manager must make a financial settlement for any upward or downward adjustments to the federal share of costs after closeout reports are received.
  3. Any real and personal property acquired with federal funds or received from the federal Government in accordance with Part 200.310 Insurance coverage through 200.316 Property trust relationship and 200.329 Reporting on real property must also be accounted for at closeout. The Program/Project Manager should complete all closeout actions for federal awards no later than one year after receipt and acceptance of all required final reports.
  4. Monitor the asset and provide oversight based on asset funding requirements. Continue to perform asset monitoring as required after grant closeout. 6) For all federal awards, a non-federal entity that expends $750,000 or more during the non-federal entity's fiscal year in federal awards must have a single or program-specific audit conducted for that year in accordance with 2 CFR Part 200 Subpart F – Audit Requirements.
B. Grant closeout requirements

Grant Purpose: B
Grant Funding Type: All (1-4)

  1. Closeout each grant agreement promptly after the period of performance.
  2. Perform subrecipient/grantee closeout evaluation, complete Grant Closeout Assessment form, and document information that will be relevant to future subrecipient/grantee risk assessments.

Grant Purpose: B
Grant Funding Type: 2, 3, or 4 (only for grants funded in whole or in part with state funds)

  1. Make prompt payments to the grantee prior to closeout. Before the final payment is approved by the OFM Grant Supervisor or their OFM designee, the Program/Project Manager must determine and document in the Grant Closeout Assessment form if the grantee performed as required by the terms of the grant agreement.
  2. As applicable, prior to final payment approval, the OFM Grant Supervisor or their OFM designee will consult with the Office of Audit to determine if a closeout audit is needed.
  3. Monitor the asset and provide oversight based on asset funding requirements. Continue to perform asset monitoring as required after grant closeout.

Grant Purpose: B
Grant Funding Type: 1, 3, or 4 (only for grants funded in whole or in part with federal funds)

  1. Submit all performance, financial, and other reports as required by the grant agreement and federal award no later than 90 calendar days after the end of the period of performance or per the terms of the federal grant agreement.
  2. Prompt payments must be made for allowable reimbursable costs under the federal award prior to closeout. Before the final payment is approved by the OFM Grant Supervisor or their OFM designee, the Program/Project Manager must determine and document in the Grant Closeout Assessment form if the subrecipient performed as required by the terms of the grant agreement.
  3. As applicable, prior to final payment approval, the OFM Grant Supervisor or their OFM designee will consult with the Office of Audit to determine if a closeout audit is needed.
  4. Liquidate all obligations incurred under the grant agreement and federal award no later than 90 days after the period of performance.
  5. At closeout, all balances of unobligated cash must be promptly refunded that the federal awarding agency or MnDOT paid in advance or paid and that are not authorized to be retained for use in other projects as is required by OMB Circular A-129 and Part 200.345 Collection of amounts due. Additionally, consistent with the terms and conditions of the federal award, the Program/Project Manager must make a financial settlement for any upward or downward adjustments to the federal share of costs after closeout reports are received.
  6. Any real and personal property acquired with federal funds or received from the federal Government in accordance with Part 200.310 Insurance coverage through 200.316 Property trust relationship and 200.329 Reporting on real property must also be accounted for at closeout. The Program/Project Manager should complete all closeout actions for federal awards no later than one year after receipt and acceptance of all required final reports.
  7. Monitor the asset and provide oversight based on asset funding requirements. Continue to perform asset monitoring as required after grant closeout. 13) For all federal awards, a non-federal entity that expends $750,000 or more during the non-federal entity's fiscal year in federal awards must have a single or program-specific audit conducted for that year in accordance with 2 CFR Part 200 Subpart F – Audit Requirements.

Compliance requirement

Any employee or office failing to comply with the requirements outlined in this policy, procedure, or applicable state or federal laws or regulations are subject to discipline, up to and including discharge from employment. The OFM Director may require additional corrective action including, but not limited to:

  • Requiring the office to develop and implement additional internal controls;
  • Requiring additional training in grant management and internal controls;
  • Revoking grant-making privileges or reassigning to other personnel;

The designation of Grant Coordinator is recommended by the program Office Director and is subject to the concurrence of the OFM Director or their designated OFM staff.

Definitions

Bonding Grant

A grant that has constitutional restrictions that limit the use of funds to improvements of a capital nature, require that the facility or property be owned by a state agency or political subdivision of the state, and require that a public program be provided in the facility or operated on the property.

Capital Grant

A grant provided to enable a subrecipient/grantee to purchase and/or make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life. Capital assets means tangible or intangible assets used in operation having a useful life of more than one year which are capitalized in accordance with Generally Accepted Accounting Principles.

Closeout

The closeout phase is where the grant process ends. In order to complete a closeout, the award recipient, must submit the final financial and programmatic reports, determine final allowable expenditures, and collect any amount due.

Competitive Grants

Grant funding that is awarded through a competitive basis where proposals are reviewed and ranked according to the programs authorizing legislation and any regulations established by the funding agency. Any organization that wants to receive funding under this type of grant will be competing with other applicants.

Contract

A legal instrument by which MnDOT purchases property or services needed to carry out the project or program.

Encumbrance

The commitment of a portion or all of an allotment in order to meet an obligation that is expected to be incurred to pay for goods or services received by the state or to pay a grant.

Financial Reconciliation

Involves reconciling a subrecipient's request for payment for a given period with supporting documentation for that request, such as purchase orders, receipts and payroll records.

Grant

An agreement between a recipient or a pass-through entity and a subrecipient when the principal purpose of the relationship is to transfer cash or something of value to the subrecipient who will administer a public program or deliver a public service. A grant includes competitive, legislatively mandated, formula, single and sole source, and capital grants.

Grant Agreement

A written instrument or electronic document defining a legal relationship between a recipient and a subrecipient when the principal purpose of the relationship is to transfer cash or something of value to the recipient to support a public purpose authorized by law.

Grant Fund Application

The application and receipt of grant funds phase represents the beginning of the grant lifecycle, which includes preparing and submitting grant applications, receiving grant award funds, and determining the use of the funds (i.e. MnDOT internal use of grant funds or MnDOT granting out funds).

Grant Monitoring

Process that assesses the quality of internal control performance over the lifecycle of the grant, funding requirements, and/or the useful life of the asset. A grant-monitoring visit involves both state granting agency staff (recipient) and the subrecipient and occurs during the period of performance. The purpose of grant monitoring visits is to review and ensure progress against the grant’s goals, to address any problems or issues before the end of the period of performance, and to build rapport between MnDOT and the subrecipient. An effective grant-monitoring visit may cover topics, including but not limited to, statutory compliance, challenges faced by the subrecipient, modifications made to the grant program, program outcomes, subrecipient policies and procedures, subrecipient governance, and training and technical assistance needs.

Legislative Authority to Spend

MnDOT is not allowed to expend the federal money it receives for any purpose unless it is included in MnDOT’s enacted budget or approved by the Legislative Advisory Commission. The governor must submit the budget request to the legislature. The Legislative Advisory Commission approves expenditure of federal money when the legislature is not in session. The OFM Budget staff will request information on anticipated federal grant funds as a part of MnDOT’s budget development process.

Non-federal Entity

A state, local government, Indian tribe, institution of higher education (IHE), or non-profit organization that carries out a federal Award as a recipient or subrecipient.

Ongoing Program Grants

Grant funding that is provided based on factors specified by the programs authorizing legislation for activities of a continuing nature usually not confined to a specific project. This type of funding includes formula grant programs which award funds to all eligible entities as dictated by law.

Period of Performance

The time during which the subrecipient may incur new obligations to carry out the work authorized under the award. The awarding agency or pass-through entity must include start and end dates of the period of performance in the award.

Post Award

The post award phase comprises a significant amount of work done during the period performance, which includes implementing the grant, performing reconciliations, and monitoring and reporting financial and performance progress.

Pre-Award

The pre-award phase includes announcing opportunities, reviewing applications, determining the contractor vs. subrecipient relationships, completing risk assessments, notifying the subrecipient of subaward, and drafting and executing grant agreements.

Pre-award Risk Assessment

The identification, analysis and management of risks or threats that could negatively affect the grant and prevent it from achieving its goals and objectives.

Program/Project Manager

Includes any position in which an employee is actively managing a grant agreement during any part of the grant lifecycle. This may also include, but is not limited to, the following positions, planner, administrator, office director, grant manager, etc.

Real Property

Land, including land improvements, structures and appurtenances thereto, but excludes moveable machinery and equipment.

Related information

Policy history

2017-04-19, Established

Ownership

Policy Owner

Robin Sylvester
Director
Office of Financial Management

Policy Contact

Heidi Henry
Agency Grant Supervisor
Office of Financial Management
heidi.henry@state.mn.us
651-366-4821