290 DEPARTMENT RESPONSIBILITY IN MAINTAINING INTERNAL FINANCIAL RECORDS, FILES, AND DOCUMENTATION

APPENDIX II

SECTION H - PAYMENTS TO STATES

1. General
   
   The Smith-Lever Act and Section 1444 of the Food and Agriculture Act of 1977 provide that payments to States shall be made on a quarterly basis: October, January, April, and July. Section 208(c) of the D.C. Public Postsecondary Education Reorganization Act adopts the payment procedures of the Smith-Lever Act. Even though funds are made available quarterly under these Acts, States are encouraged to comply with the U.S. Treasury Department's regulations to draw funds on an as needed basis. Any interest earned on grant funds received pursuant to these Acts must be returned to the U.S. Treasury. Funds provided under other authorizing legislation such as (the Renewable Resources Extension Act and Title V of the Rural Development Act), which do not contain a Congressional intent for a particular payment scheme in conflict with the Intergovernmental Cooperation Act, Public Law 90-577 are subject to that Act's provisions, including the procedures requiring States to draw down only as needed and the waiver of interest provision.
   
   
2. Custody of Funds
   
   All Federal funds allowed to States by ES are made available by issuance of a Letter of Authorization and amendments thereto. The State Extension Director and the 1890 Administrator are responsible for the custody of all Federal funds and for compliance with the Letter of Authorization and the Payment Management System procedures. Funds may be disbursed only as authorized by the Extension Director or 1890 Administrator or their designee. Funds should be deposited in accordance with requirements of 7 CFR 3015, Subpart B., Uniform Federal Assistance Regulations. However, wherever funds are deposited, the Director's and 1890 Administrator's custodianship is not terminated under any circumstances until funds are expended for the purpose specified in the Act(s) authorizing such funds. The State Extension Director or 1890 Administrator, or their designee, must approve all expenditures of funds made available for Cooperative Extension programs.
   
3. Letter of Authorization

1. General
   
   A Letter of Authorization is a commitment of funds prepared and certified by the Cooperative Funds Division (CFD), ES-USDA. It is the equivalent of cash available to the extent that funds have been obligated in good faith in executing the program. Allocation of all Extension funds administered by the ES under the Smith-Lever Act, Public Law 95-113, Section 1444, and the Renewable Resources Extension Act, will be made available to the State Directors and Extension Administrators under Letter of Authorization, and amendments thereto. These funds will be made available on a quarterly basis October, January, April, and July based on an approved program.
   
   Payment on a Letter of Authorization under the Department of Health and Human Services' Payment Management System (DHHS-PMS) is based on advanced certification from CFD in the form of an appropriately certified letter of Authorization. Drawdowns against such certifications are in the form of request for funds initiated by the Primary Contact Person at the recipient organization. This Primary Contact Person has been authorized by the Director/Administrator and certified to the DHHS by CFD.
   
2. The Payment Management System
   
   The DHHS-PMS is an electronic funds transfer application of the Letter of Authorization payment method developed by the CFD, ES-USDA. DHHS developed the Payment Management System to create a central point within their department capable of paying grants and contracts of a Federal assistance type nature.
   
   One of their objectives was to provide cross servicing capabilities for other government agencies. The primary purpose of the DHHS-PMS is to facilitate the flow of Federal funds from the Extension Service account at the U.S. Treasury to recipient organizations. With the proper equipment, recipient organizations meeting the DHHS-PMS requirements are eligible for the Letter of Authorization payment method.
   
   The DHHS has initiated an on-line payment system that processes funds requests directly from a recipient's personal computer (PC) or terminal into PMS. The recipient must receive authorization to enter the on-line system known as PMS SMARTLINK II. The necessary equipment includes a personal computer (or terminal), a modem, telecommunication software, a telephone line, the SMARTLINK II telephone number, and appropriate password. Detailed procedures can be found in Exhibit 5, "SMARTLINK II USER'S GUIDE".
   
3. Issuing Letters of Authorization
   
   Letters of Authorization will be issued without time limitations to the recipients of ES Funds. This form includes an itemization of these funds by program or project, where applicable (Exhibit 7). Amendments will be issued covering increases or decreases from the amount previously authorized to be drawn. Copies of each Letter of Authorization amendment will be forwarded to the State Director or Extension Administrator, as well as the Primary Contact Person.
   
   If an Institution's Financial Report for the previous fiscal year and/or plan of work, Budget, or matching certification for the current fiscal year have not been received by the requested dates, the next quarter's Letter of Authorization for that institution will not be amended.
   
   In the event ES receives its funds under a Continuing Resolution passed by the Congress, amendments for current year funds will be issued in amounts complying with the provisions of the Continuing Resolution.
   
   (1) Amendment or Revocation of Letter of Authorization

1. Any one of the following conditions will require an amendment of the Letter of Authorization:
   
   A change in the recipient's name or the DHHS issued account number. If this information changes, the recipient's organization should notify CFD immediately.
   
   Authorization for the recipient organization to draw amounts in excess of $5,000,000 is established or rescinded.
   
   An increase or decrease in the "Amount Authorized." These amendments are issued by USDA-CFD based on receipt of revisions. which significantly increase or decrease the total authorization on file at DHHS. A statement will be included in the amending Letter of Authorization to explain any amendment other than a change in the amount authorized.
   
2. Revocation of a Letter of Authorization is a matter for administrative determination by the Federal program agency. The Federal program agency in this case is the ES, USDA. In the event a Letter of Authorization is revoked, an alternative payment method will be utilized, if appropriate. Any of the following conditions may result in the revocation of the Letter of Authorization.

1. Annual aggregate financing falls below $120,000. If the reduced level is only temporary, the Letter of Authorization may remain in force.
   
2. The business relationship between the Federal program agency and the recipient organization is completed or terminated except where follow-on awards are expected to be authorized.
   
3. The Federal program agency determines that progress is not satisfactory toward achievement of the cash management objective of the Letter of Authorization method of financing.
   
4. The recipient organization fails to complete any periodic reports that are required by the Federal program agency.

3. Direct Deposit Sign-Up Form SF-1199A

1. In order to obtain a Letter of Authorization and participate in the Payment Management System, the recipient organization's financial institution must have on file a completed Form SF-1199A (Direct Deposit Sign-Up Form, Exhibit 8).
   
2. A completed SF-1199A should be forwarded to CFD for approval and forwarding to the DHHS. The form must be signed by the State Director/Administrator to request funds against the Letter of Authorization and be certified by a representative of the financial institution.
   
3. New SF-1199As must be submitted to CFD whenever there is a change of financial institution, name of the payee, or change of depositor's account number. Directions for completing SF-1199As are on the back of Exhibit 8. (See Exhibit 8).
   
4. When submitting the initial SF-1199A, you should also give the name of the Primary Contact Person for this payment system. The Director or 1890 Administrator and the Legal Custodian at the University should, by mutual agreement, decide on the individual authorized to request funds.
   
5. CFD will send the Primary Contact Person a copy of the user's guide, a floppy disk containing the communication software and test procedures. Once the system has been tested, DHHS will issue an account number and password to the Primary Contact Person.

4. Requesting Funds

1. Funds may be requested between the hours of 08:15 and 17:00 eastern time, Monday through Friday, with the exception of Federal holidays.
   
2. Security precautions are very important. Please observe the following guidelines when using the PMS:

1. Maintain the physical security of your PC. Keep your PC and software locked when authorized personnel are not present.
   
2. Memorize you PASSWORD; do not write it down. You will receive your password in a certified, letter. Lock this letter in a safe place. This password will not change.
   
3. Memorize your IDENTIFICATION NUMBER; do not write it down. You will receive your "Old" Identification Number in the same certified letter as your password.
   
   This number is related to your PMS Account Number and works only in combination with your correct PMS Account Number. You will be required to change your "Old" Identification Number the first time you use SMARTLINK II.
   
   When selecting a new identification number, do not select words or numbers that could be easily guessed (e.g., your name, a family member's name, your birthday, etc.)

3. There are two screens for each payment request: (1) a Security Screen and (2) a Payment Request Screen. After the request for funds is entered, it is validated and the caller receives either a tentative approval message or an error message. When the payment request is complete you will have the option of making another payment request or logging off. Explicit payment instructions are found in Exhibit 5, SMARTLINK I1 User's Manual.
   
4. The SMARTLINK II "Help Desk" phone number is (301) 443-4854. It is available between the hours of 08:15 and 17:00 eastern time, Monday through Friday, with the exception of Federal holidays. If you are having difficulties that are not covered in the user's manual, please call the Help Desk. Have the details of your problem, including any error messages and error numbers encountered, ready before you call.
   

Revised May 1994