Managing their federal funding is one of the most important things that schools have to do when reconciling their finances. Unfortunately, many institutions aren’t proactive in their approach, which can create all kinds of issues.
Many schools use spreadsheets to manage these funds—which aren’t sophisticated enough to do the job well—or they run a monthly report, with no idea ahead of time where the numbers will land.
On top of that, schools get audited all the time on their funding and if their records aren’t accurate, it causes major issues and could even result in losing that funding.
Schools not being proactive with their funding also have negative implications for the student experience. For example, say a student borrowed more than they “needed” so that they could also pay for living expenses. If the school gets audited and their funds are taken away, now that student isn’t going to get the money they need.
If this sounds familiar, you certainly aren’t alone. However, you shouldn’t have to live in the dark when it comes to funding source management. And the good news is that you don’t have to.
Taking the reins to own the management of 90-10, Workforce Investment Act (WIA), and Veterans Affairs (VA) funding is possible with thoughtful, proactive, and intentional planning. We’ll explain how to do that—but first, let’s take a closer look at these funding sources.
What are the Common Types of Federal Funding?
The three most common types of federal funding are Title IV Federal Financial Aid, 90-10, WIA, and the VA. Each of these has unique offerings and requirements, but they’re all designed to help schools and their students offset the cost of their education.
90-10
The 90-10 Rule stipulates that schools cannot receive more than 90% of their revenue from federal funding. In other words, at least 10% of their revenue must come from out-of-pocket expenses paid by their students and other sources.
Workforce Investment Act (WIA)
The Workforce Investment Act was passed in 1998 and was designed to help job seekers access employment, education, training, and support services to help further their careers. Like the 90-10 Rule, the WIA also requires a percentage rule that must be met in order for schools to keep the funding.
VA Funding
VA funding for schools most often applies to trade schools, which tend to have a higher percentage of their student population being veterans and active military members. Like the others, VA funding had percentage requirements and is passed down to help make earning an education more affordable and accessible to students of all ages.
Each year, billions of dollars in federal funding are passed down to both public and private institutions. To qualify for this funding, schools must meet certain criteria in terms of accreditation, program offerings, financial aid, and more. Each program has its own requirements, but the same principles hold true: schools need to keep accurate records or risk losing their funding.
How to Proactively Manage Your School’s Funding
While every school is different and each of these funds has specific nuances, these best practices apply in most situations to most schools, whether you’re a local institution, state university, or community college.
First and foremost, it’s critical that you have a tool that lets you manage your funding quickly and accurately. As I’ve already stated, spreadsheets are not good enough.
It’s really important that you’re able to monitor your funding with confidence and be able to provide the necessary information when you get audited—which will happen eventually if it hasn’t already.
The records you keep need to be 100% accurate. Programs like WIA and VA know exactly how much money they’ve given you, so you better be sure that your records match theirs. “Close enough” is not going to cut it.
Take 90-10, for example. If you see that you’re currently sitting at 92%, your only option to avoid penalties is to stop receiving Title IV funding—which means stopping your cash flow. If you lose 92% of your cash flow, how are you going to pay your bills?
We once worked with a school that got audited by WIA. Unfortunately, their records didn’t match what the WIA had kept which caused some major issues. They had to quickly figure out how they had classified the money in their books and how they had misclassified it in the first place. It created quite a headache for their team.
So, how can you be more proactive and avoid situations like these?
Be More Intentional About It
You should never find yourself in a situation where you are running a report with no idea of the results. Instead, have intentional meetings, plan for it, and take control of your funding source management.
Many schools “see where they land” after the fact and then try to adjust accordingly if their numbers are off. Hopefully, these examples above have shown you that this is not a recipe for success.
Make it Formally Part of Someone’s Job Responsibility
Funding source management is not anyone’s favorite task to do and can quickly become an afterthought if there isn’t someone taking direct responsibility.
If it’s part of someone’s job description, however, it’s more likely to be done accurately and proactively. This shouldn’t just be something that “Finance” is responsible for in broad terms—someone should own it!
Use Software that Helps You
Don’t drive yourself crazy with an overcomplicated (and probably inaccurate) spreadsheet or a paper trail that’s difficult to manage. There are tools out there that are specifically designed to help schools manage their funding, monitor their ratios, and help avoid penalties and fines.
These workflow automation tools give you both actual and projected numbers, real-time insights into how the funding is being allocated, and warnings when you’re in danger of missing the mark.
Take Control of Your Fund Source Management
With Verity’s platform, you’ll be able to manage your fund sourcing with confidence and without all of the headaches that come from patchwork solutions.
To get accurate insights into your funding allocation, you can run a report to look at the data or run a projection to see where you’ll land a month, a semester, or a year from now. That way, you’ll be able to make informed decisions about how to manage and allocate these federal funds.
You can even look for trends on the program level to see how this may be impacting your program offerings. For example, is there a certain program that tends to get the majority of the funding? Why is that? How can you adjust if needed? Without the data, you won’t have that opportunity.
We also know that every school is different, so we’ve created the ability for you to customize your configurations so that you can run whichever reports are most important to you and your institution. If you’re ready to take control of your fund source management, let’s talk! We’d love to show you how you can manage your federal funding with confidence, accuracy, and far fewer headaches.
