Session #61

What’s going on with the Federal Fund Katrina Turner Barbara Johnson

Agenda
• • • • • • What is the Federal Fund Federal Fund Reporting Requirements Uses of Data Management Plan Impacts to the Federal Fund Reconciliation of Annual GAFR Data to Guaranty Agency’s Financial Statements

What is the Federal Fund
• Federal fund reflects all assets held by the guaranty agency and is the property of the United States • GA’s are required to maintain fiduciary responsibility

Federal Fund Reporting Requirement
• Annual Report –Data is reported as of September 30 on an accrual basis and is due by Dec 1

Uses of Data
• Monitor guarantor’s financial activities; –Federal & Operating Fund Balances –Minimum Reserve Ratio –Projections • ED’s financial statements; • Reasonability to NSLDS data; • Minimum Reserve Ratio; and • Trigger Rate

Management Plan
• Guaranty Agencies are required to submit a management plan when the Secretary determines that the administrative or financial condition of the agency is in jeopardy • Indicators –Minimum Reserve Ratios –Declining Federal Fund –Operational Issues

Management Plan (Con’t.)
• What is included in a Management Plan Business Overview •Agency description •Business model •Challenges

Management Plan (Con’t.) •Competitors •Unique characteristics and factors leading to financial instability

Management Plan (Con’t.)
Business Plan • Specific actions taken or proposed to re-establish financial stability • Target Dates • Performance Measures • Financial projections for Federal Fund and Operating Fund (3 to 5 yrs)

Management Plan (Con’t.)
•Recommendations for assistance and reporting progress status to the Department •Audited Financial Statement for the last 2 years

Management Plan (Con’t.)
• Next Steps –Submittal –Review –Approval –Monitor –Exit Strategy

Impacts to Federal Funds
• Account Maintenance Fee (AMF) Authority to Transfer funds was rescinded July 1, 2006

Impacts to Federal Funds
• Default Aversion Fee (DAF) Permitted to Transfer DAF from Federal fund to Operating fund per lender’s request for default aversion on the loan

Impacts to Federal Funds
• Federal Default Fee Requires Collection of 1% for loans guaranteed on/after July 1, 2006 Requires deposit of fee into GA Federal fund GA may collect from borrower or pay from non-Federal sources

Impacts to Federal Funds
• Reserve Recall Final installments of the $250 million Federal reserve recall as required by Section 422(i) of the HEA, (as amended) and held by GA’s were received as of Sept 1, 2007

Impacts to Federal Funds
• Under/Over reporting of Rehabilitated Loans Excess payments in the Federal fund due to incorrect method of calculating the reinsurance complement for rehabilitated loans

Impacts to Federal Funds
Incorrect reporting identified during program review or self reported by GA GA must request the Department’s approval prior to transferring funds from the Federal fund to the Operating fund

Impacts to Federal Funds
How to Request the Funds? List of Required Documentation
 Amounts that should have been deposited/reported vs. Amounts that were deposited/reported  Proof that the funds were actually deposited into the Federal Fund (Examples may include deposit receipts)  Reimbursement rate the GA used to calculated the incorrect amount

Reconciliation of Annual GAFR Data to Guaranty Agency’s Financial Statements
• Requests for GA Financial Statements –Annually –6 months after audit period ends • Review/Analysis

Contact Information
We appreciate your feedback and comments. We can be reached at:
Katrina Turner 202.377.3311 Email address Katrina.Turner@ed.gov BJ.Johnson@ed.gov Fax: 202.275.0913 Barbara Johnson 202.377.3327