Title III Administrative and Financial Requirements Policy #12: Payments from AAAs to Service Providers
This content is part of a public comment period. For more information, refer to Minnesota Board on Aging – State Plan on Aging.
Note: We updated content on this page on April 17, 2025. Changed content is indicated with [add] and [delete].
Authority Reference | 45 CFR Part 75.305 45 CFR 1321.9(c)(2)(xviii) Minnesota Statutes 16A.124 and 16A.1245 |
Operating Category | Title III Administrative and Financial Requirements |
Policy
1. Payment of direct service funds by an AAA to a service provider may be either in the form of a reimbursement or an advance payment under certain circumstances as outlined below.
2. Before making payments to a service provider, the AAA must evaluate the service provider’s cash requirements including cash on hand. Advance payments for grant awards shall be limited to the cash requirements for the period and not merely make predetermined payments during the grant year. Initial advances to a recipient under a contract shall be limited to no more than 60 days; thereafter, reimbursement shall be made on a periodic basis (e.g., monthly, quarterly) as determined by the AAA. The AAA must establish written procedures which minimize the time elapsing between receipt of funds by each recipient and their disbursement.
3. Payments may not be made to service providers until funds are encumbered and grant agreements or contracts are fully executed.
4. The method and schedule of payments from the AAA to the service provider shall be specified in the grant or contract agreement.
5. Payments shall not be made on grants or contracts with past due progress reports, unless the AAA has given the service provider a written extension.
6. Reimbursement is the preferred method of payment. However, AAAs may make advance payments in certain situations as described below.
7. Service provider requests for reimbursement must correspond to the line items in the approved grant [add] or contract [end add] budget (for example, personnel costs or equipment) [add] and to the number of units provided and individuals served [end add]. AAAs [add] must [end add] [delete] will [end delete] review each request for reimbursement against the [add] numbers of units provided and individuals served as recorded in PeerPlace (or, in the case of unregistered services, in Grant Utility), [end add] approved contract/grant budget, grant expenditures-to-date [add], [end add] and the most recent service provider progress report prior to approving payment.
8. Advance payments are permissible in the following circumstances:
A. Before making an advance payment, the AAA must be confident the service provider will be able to account for the grant funds and abide by the terms of the grant agreement based on their past performance and the evaluation of the service provider’s recent financial statements as required under other state grants management policies.
B. In order to make advance payments, the AAA must include a written justification in the grant agreement or otherwise prepare a written justification that describes the specific need to utilize advance payments. The written justification must be approved prior to encumbrance. A record of the signed justification must be maintained in the service provider’s file.
C. The terms of advance grant payments and settlements must be reflected in the grant or contract agreement. All advance payments on agreements over $50,000 must be reconciled prior to requesting another advance payment, within 12 months of issuance, or within 60 days of the end of the grant period.
D. Service providers may only request advance payments to meet their immediate cash needs for paying for allowable costs under their agreement. Service providers must minimize the time elapsing between receipt of funds and their disbursement.
E. To the extent available, the service provider must disburse funds available from program income before requesting additional cash payments from a AAA.
F. Service providers must maintain advance payments of Federal awards in interest-bearing accounts, unless the best reasonably available interest-bearing account would not be expected to earn interest in excess of $500 per year on Federal cash balances and the depository would require an average or minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources.
G. Interest earned amounts up to $500 per year may be retained by the service provider for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the U.S. Department of Health and Human Services.
9. In accordance with both federal regulations and state law, the AAA must make timely payment to service providers. AAAs must pay service providers within ten days of the AAA’s receipt of payment from the state for undisputed services provided by service providers.
Procedures
1. AAAs must establish policies and procedures that align with this policy.
2. When service providers submit a payment request to their AAA, the service provider must identify the appropriate source of funding to pay for the expenditure.
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