© 2013 Community Action Program Legal Services, Inc.

Top Notch CAAs: Performance from the Legal Perspective Plus

Hot Legal Topic UpdateNew York State Community Action Association

Annual Training ConferenceJune 13, 2013

Anita Lichtblau, Esq.Executive Director/General Counsel

Community Action Program Legal Services (CAPLAW)www.caplaw.org 617.357.6915

2© 2013 Community Action Program Legal Services, Inc.

Agenda

• Organizational Standards: legal angle– Leadership– Governance– Human Resources– Using legal resources to meet standards

• Hatch Act amendments

• Proposed OMB Circular revisions

• Affordable Care Act

3© 2013 Community Action Program Legal Services, Inc.

CAA Organizational Standards

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Background and Timeline

• Administration CSBG budget language• Grant to Community Action Partnership• Urban Institute contract for Performance Standards• ROMA Next Generation -- NASCSP• CAA network survey • Pilot testing in states• Submission to OCS by July 1, 2013• NCAF Proposed Reauthorization bill

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Objectives of Organizational Standards

• Current iteration -- not “excellence” but minimum threshold for compliance and monitoring by states

• National standard or state-by-state adoption?• Next step – one to five scale

– CAAs would use for self –improvement– States would use for training and technical assistance,

recommendations for best practices

• Informational Memoranda from federal Office of Community Services– Federal, state, and local standards

• OCS would like to use as basis for competition at local level if legislative change

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Components of Organizational Standards

• Leadership• Governance• Financial Management• Human Resources• Strategic Planning• Community Assessment• Consumer Input• Community Engagement• Data Analysis

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Some Leadership Standards

1.1 Board has reviewed mission statement in last 5 years and assured that:– Mission addresses poverty; and– Programs and services are in alignment with mission

1.4 Written succession plan is in place for CEO/ED, approved by Board, that contains procedures for covering emergency/unplanned, short-term absence of 3 months or less, and outlines process for filling a permanent vacancy

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Some Governance Standards

2.1 Board is structured in compliance with CSBG Act:

1. At least one third democratically-selected representatives of low-income community;

2. One-third local elected officials (or their representatives); and

3. Balance from major groups and interests in community

2.2 Board has written procedures that document democratic selection process for low-income board members adequate to assure that they are representative of low-income community

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Some Governance Standards

2.3 Bylaws have been reviewed by an attorney within past 5 years

2.4 Board members receive and review bylaws at least every two years

2.5 Board meets in accordance with frequency and quorum requirements and fills board vacancies as setout in bylaws

2.6 Board members sign conflict of interest policy and procedures, and review them at least every 2 years

2.8 Board members provided with training on dutiesand responsibilities at least every 2 years

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Some Human Resources Standards

5.1 The agency has written personnel policies reviewed by attorney and approved by Board within past 5 years

5.2 The agency makes available Employee Handbook (or personnel policies in cases without a Handbook) to all staff and notifies staff of any changes

5.4 Board conducts performance appraisal of CEO/Executive Director within each calendar year

5.5 Board reviews and approves CEO/Executive Director

compensation within every calendar year

5.7 The agency has a whistleblower policy approved by Board within past 5 years.

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Using Legal Resources: Attorneys

• Knowledgeable local counsel is essential• Procurement process• Key areas of expertise:

– Employment and labor law– Non-profit organizations– Real estate and contract law

• Attorney on board of directors, or consultant to board, required for Head Start grantees

• Understand contract and billing structure• Pro bono services• Employer Smarts program

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Using Legal Services: Training and Policies

• Use attorneys or other qualified professional to conduct training on human resources issues– Discrimination, sexual harassment, wage and hour law

• Consider in-person on-site or off-site training, videos, online training, webinars, newsletters– CAPLAW website has many free recorded webinars and content on HR

issues

• Communicate training throughout organization• Use attorneys to review or draft and update personnel policies

– Consistent with federal and state law

– Understandable

– Reflects current practice

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Legal Resources: Monitoring

• Use attorneys and other experts to prepare for key reviews, like Head Start

• Seek advice of attorneys in responding to monitoring and audit findings, cost disallowances

• Attorneys may be able to provide specific authority for your position and assist in persuasive arguments

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Using Legal Resources: Non-profit Status and By-laws

• Legal advice in in creating structure, and ensuring compliance with law, for new ventures and affiliations– New legal entities– Preserve tax-exempt status– Mergers– Determine status of existing grants

• Legal review of by-laws and board policies– Organizational standards: every 5 years– Update to be consistent with new laws– Keep up with changing technology– Bring into line with changing practices and operations of CAA– Review board size and structure– Conflict of interest and whistleblower policies

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Ensuring Compliance: What else?

• Tone at the Top– Oversight role of Board– Culture of compliance– ED setting the right tone by word and example

• Systems are set up, implemented, followed, and monitored

• Written policies• Competent auditors• Assigning responsibility• Holding staff accountable

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CAPLAW Compliance Resources

• Exemplary Legal Practices and Policies Guidebook

• Top-Notch CAA Toolkit: Governance and Financial Issues

• Legal Liability Audit

• CAPLAW By-laws Toolkit

• www.caplaw.org

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Hatch Act Amendments

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Provisions that Remain in Place

• CSBG and Head Start Acts treat certain employees of CAAs and Head Start grantees as state or local employees for purposes of Hatch Act

• CAA and Head Start employees who:– Spend more than half of their working time working for, or earn

more than half of their salary from, a CAA or Head Start grantee, and

– Work in connection with activities funded by CSBG or Head Start

• May not use their official authority to influence elections• May not demand, advise, or coerce any other covered

employee to donate to political campaigns

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Revised Provision

• Until January 2013:– CAA or Head Start grantee employees who worked in

connection with an activity funded by CSBG or Head Start could not run for office in a partisan election

• After January 2013:– Only employees who are paid 100% with CSBG and/or Head

Start funds may not run for office in a partisan election

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Proposed OMB Uniform Guidance

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Purpose of Proposed OMB Uniform Guidance

• Consolidate all administrative grant rules, cost principles, and audit requirements for all types of entities into one set of guidelines and rules

• Ease administration of rules for federal agencies and pass-through entities that fund different types of entities

• Promote uniformity • Add new guidance• Make substantive changes to some sections

© 2013 Community Action Program Legal Services, Inc.

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Timeline of OMB Supercircular

• Comments were due June 2, 2013– www.regulations.gov

• Final OMB rule will likely be published in 6 months to a year after comments

• Each federal agency adopts its version of OMB rule

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Highlights of Proposed Changes

• Negotiated indirect cost rates will generally be accepted by all federal agencies – Limited exceptions, must be reported to OMB

• If grantee doesn’t have negotiated indirect cost rate, rate of 10% will be set

• Pass-through entities must accept or negotiate indirect rates• Grantees may request one-time four-year extension of existing rate • Expressly recognizes method of charging shared costs as direct

costs by allocating through intermediate cost pools, such as HR and Finance

© 2013 Community Action Program Legal Services, Inc.

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Highlights of Proposed Changes

• Procurement– New language based on A-102, which applies only to state and

local government entities– Clearer guidance on when different types of procurement

procedures should be used• Small Purchase

– Threshold raised to $150,000 from $100,000– Obtaining multiple quotes or prices ok

• Formal RFP solicitation process• Sealed bid• Sole Source

– Cost or price analysis only above $150,000???– Competition still required for all procurements, consistent with

rule

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Highlights of Proposed Changes

• Subrecipient selection and monitoring provisions brought together into one section, with additions– Pass-through entities must do risk assessment of prospective

subgrantees prior to awarding subgrants– New provisions clearly spell out requirements of pass-through

entities when making award• Contract provisions

• Indirect cost rate ….

– Must have system for ongoing monitoring, corrective action, and enforcement for noncompliance

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Highlights of Proposed Changes

• Federal agency must close out grants within 180 days of grantee report– Recommend three year window for cost disallowances?

• More flexibility on time and effort reporting• Allowable residual inventory set at $5,000• A computer costing less than $5000 may be included as budget as

supplies • No more use allowances for real property• Lease/purchase analysis no longer required to charge interest on

mortage loan• Broader lobbying prohibition – would apply to government regulations

and policies as well as legislation• Travel costs of trustees and directors are allowed only with prior

approval.

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Affordable Health Care Act(“ACA”)

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Pay or Play

• As of January 1, 2014, ACA requires employers to offer health care coverage to their full-time employees and children up to age 26 (“Employer mandate”)– Exceptions to Jan. 2014 effective date for some employers that

sponsor fiscal year health plans– Only employers with average of 50 or more full-time (30 hours

weekly) or FTE employees– Coverage must have “minimal essential coverage,” be

“affordable,” and satisfy “minimum value” requirement• “Affordable” means employee payment doesn’t exceed 9.5% of

employee’s household income

• Coverage provides “minimum value” if plan’s share of projected costs of covered benefits is at least 60%

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Pay or Play

• If employer doesn’t “play” by complying with Employer Mandate, it must “pay” a penalty. Either:– Employer doesn’t offer health coverage to “substantially all” of its

full-time employees and any one of its employees both enrolls in health coverage offered through a State Insurance Exchange and receives a premium tax credit or cost-sharing subsidy. The penalty is $2000 per year for each full-time employee, excluding the first 30; or

– Employer does offer health coverage, but it isn’t “affordable” or doesn’t provide “minimum value” or offers coverage to substantially all (but not all) employees, and one or more full-time employees enrolls in Exchange coverage and receives Exchange subsidy

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Exchange Subsidy

• Two subsidies available:– Premium tax credit

• Help individuals and families purchase health coverage through an Exchange

• Available to legal U.S. residents whose household income is 100 to 400 % of federal poverty line (“FPL”)

– 400% of FPL is $44,680 for individual; $92,200 for family of 4

• Legal resident aliens qualify if household income below 100% of poverty

• Individuals eligible for Medicaid, Medicare, or other gov’t sponsored coverage like CHIP or veterans’ health care aren’t eligible

• Employee not eligible if she is either enrolled in employer health plan or eligible for employer plan that meets affordability and minimum value requirements

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Exchange Subsidy

• Cost-sharing subsidy– Reduce cost-sharing amounts such as copays and deductibles– Available to individuals whose household income doesn’t

exceed 250 % of FPL and enroll in “silver level” coverage through Exchange

• Depending on income level, employee may be eligible for both credits

• Employer mandate penalty applies only when employer has first received certification from IRS that one or more employees have received subsidy

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Pay or Play

• Resources:

– Jones Day article: http://www.jonesday.com/deciding_whether_to_play_or_pay/

– CAPLAW articles and recorded webinar:

http://www.caplaw.org/resources/bytopic/healthreform.html

33© 2013 Community Action Program Legal Services, Inc.