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Matching Letter and Response from NIFA

July 18, 2000

TO: Dr. Charles W. Laughlin

FROM: Leodry Williams

RE: REQUEST FOR CLARIFICATION (Use of Required Match for 1890 Institutions)

Because of numerous questions raised regarding appropriation and expenditure of matching funds, AEA requests a written clarification of the following issues:

1. How broadly should institutions interpret allowable uses of new monies. Should new funds be used exclusively for research and Extension activities and how broadly are educational activities defined within the context of the law (e.g., is support of degree granting classroom instruction allowable?) And if yes, must that degree granting program be in the Food an Agricultural Sciences?

2. If the minimum match for Extension and research has not been met, can new monies be used to support degree granting teaching programs?

3. The USDA certification letter indicates only that we have received the money within the Extension budget and met the match. It does not specify that the funds are being used to support Extension and research programs. Should certification letter be modified?

4. If you sign the certification form indicating that you have received the match for research and Extension, is it illegal to use those funds for other purposes?

5. Specifically, AEA requests further written clarification or interpretation of the matching requirement, including directives regarding allowable sources of match and allowable expenditures.

There are some challenges facing some institutions:

1. Lack of control of state funds allocated for research and Extension when they come to the university.

2. Expectations that existing academic funds can be used to meet the match.

3. Desire to use the matching funds to support programs outside the Food and Agricultural Sciences.

I will discuss these issues/concerns with Dr. Ralph Otto during my visit to Washington, but hope we can receive written definitive responses as soon as possible.

Thank you.

Copy: Dr. Ralph Otto
AEA Administrators

September 5, 2000

Dr. Leodrey Williams
Cooperative Extension Program
Southern University
P.O. Box 10010
Baton Rouge, Louisiana 70813-0010

Dear Leodrey:

Thank you for your letter of July 18, 2000, requesting clarification on the new requirement for the 1890 land-grant institutions to match the Federal formula grant funds. This requirement arises from section 226 of the Agricultural Research, Extension, and Education Reform Act of 1998 (AREERA) which added section 1449 to the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (NARETPA). This section requires matching funds from non-Federal sources for formula grant funds authorized under sections 1444 and 1445 of NARETPA for agricultural research and extension activities at the 1890 land-grant institutions.

In general, it is our understanding of the intent of Congress that section 226 of AREERA was designed to generate new funds to be budgeted and expended for agricultural research, extension, and education. According to the legislation, matching funds are required for agricultural research and extension Federal formula grant funds, but may be used for "agricultural research, extension, and education activities." In addition, the National Institute of Food and Agriculture (NIFA) promulgated regulations (7 CFR 3419) to implement this new section of AREERA. Your institution and all the other 1890 land-grant institutions already have identified the above activities in the 5-Year Plan of Work which was submitted to and approved by the NIFA last year for fiscal years 2000 - 2004. This also was a new requirement of AREERA under section 225.

Attached is a copy of your letter for reference purposes. The numbered paragraphs that follow correspond to the numbered questions in your letter.

1. The new monies to which you refer are the matches provided by the States from non-Federal sources. These matching funds may only be used for activities that fall within the purposes of agricultural research and cooperative extension under sections 1444 and 1445 of NARETPA or for "qualifying educational activities." "Qualifying educational activities" are defined as "programs that address food and agricultural sciences components of an eligible institution." This could include support of degree-granting classroom instruction. Once again, NIFA expects that these activities will be identical to those you have listed in your approved 5-Year Plan of Work.

The intent here is clear: the match is intended to support, expand, and promote programs in research, extension, and education related to food and agricultural sciences. The match may not, for example, be spent on educational activities in support of a liberal arts degree-granting program.

2. The matching requirement is not an all or nothing proposition. Whether the match is made in part or in whole, monies submitted as the match may not be spent on degree-granting or any other programs outside of those in the food and agricultural sciences. If you did not make the minimum, and the matching funds are used for non-food and agricultural sciences purposes, then they would no longer be matching funds and your formula payment would be reduced accordingly.

3. The "Certification of Offset and Entitlement" is an Office of Management and Budget (OMB) approved form and appears adequate to meet its purpose. You express concern that the form does not require the matching funds be specified for "Extension and Research" programs. The legislation, however, states that these matching funds may be used for agricultural research, extension, and education. The form reads, in part, "...the [matching] funds are derived from non-Federal sources listed below and are available and budgeted for expenditure for agricultural research, extension, and education activities...." (We have added the emphasis.).

4. Signature on the Certification of Offset and Entitlement affirms that the institution (a) has the funds specified, and (b) has "budgeted them for expenditure on agricultural research, extension, and education activities in accordance with the provision of the Act cited above. " The legislation and the regulation on this requirement published in the Federal Register on April 21, 2000, [65 FR 21630-21632] are clear: matching funds may only be spent on agricultural research, extension, and education activities.

We have added emphasis in the paragraph above to reflect the serious nature of this certification. It is a requirement that is subject to audit and will be reviewed by oversight agencies. If matching funds are later found to have been used for non-agricultural research, extension, and education activities, costs for the equivalent amount of Federal funds will be disallowed and recovery sought. A false certification also could give rise to a claim against the institution under the False Claims Act.

5. As mentioned previously, NIFA published a Final Rule on these matching requirements in the Federal Register on April 21, 2000, and this rule is now part of the Code of Federal Regulations (7 CFR 3419). As explained above, the rule is very clear on the sources of matching funds and their allowable purposes.

We hope that this is helpful. We realize that the 1890 land-grant institutions are going through a period of transition, along with NIFA, as we all work to understand and implement the new provisions of AREERA. If we can be of further help in attaining this goal, please let us know.




cc: Executive Council
1890 Extension Administrators
1890 Research Directors
1890 Presidents


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