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Grant Closeout

What happens to unused federal grant funds?

AN OVERVIEW FROM GAO-16-362


How do funds flow through the grant life cycle?


Circuar flowchart:
1. Congress appropriates funds to agency.
2. Grantee applies for and agency reviews and awards grant.
3. Agency establishes an account to disburse funds to grantee in a
payment system.
(Sidebar: About 77% of federal grant funds go through the HHS Payment
Management System. All the data for this graphic are from this system.)
4. Grantee uses funds for projects in health care, education, research,
and more.
5. After the grantee's award and implementation period ends, grantee
submits final financial and performance reports to agency.
(sidebar: The Payment Management System also creates reports that show
whether accounts are ready for closure.)
6. After reports are approved, agency should close the grant account.
7. If the account is closed, agency may use remaining funds for
authorized purposes or return the funds to the Treasury. If the account
isn't closed...

Central pull-out:
$994 million = in unspent grant funds remained in accounts past their
award and implementation period as of Sept. 30, 2015.


What's the situation with grant closeouts, and how has it changed?


The number of accounts that could have been closed decreased by >1,700

Bar chart -- Number of accounts:
10,548 in 2011
8,832 in 2015

While the total amount of funds remaining in these accounts increased by
about $200 million

Bar chart -- Dollars in millions:
$794 in 2011
$994 in 2015

Snapshots of Sept. 30, 2011 and Sept. 30, 2015


As of Sept. 30, 2015, a small number of these accounts had large
balances, while half of the accounts had relatively small balances.

Bar chart -- Percentage:

Accounts:
Accounts with >$1 million in unused funds = 2%
Accounts with <$1 million and >$10,000 in unused funds = 47%
Accounts with <$10,000 in unused funds = 51%

Funds:
Accounts with >$1 million in unused funds = 54%
Accounts with <$1 million and >$10,000 in unused funds = 45%
Accounts with <$10,000 in unused funds = 1%


Even accounts with no money in them can incur fees if they aren’t
closed.

In September 2015:

5,906 = Number of accounts with no money in them that the Payment
Management System identified as ready for closure

$29,000 = Approximate fees that these accounts incurred in September
2015


Why do agencies say grant accounts are left open?

Obstacles to Final Grant Reporting and Processing that May Impact
Closeout 
 - Grantee under audit
 - Grantee no longer in existence
 - Manual report reconciliation process
 - Disconnection between grant management and payment system
 - Final indirect cost rate approval
 - Cost-sharing agreements/program income
 - Delayed technical deliverable
 - Grant projects that require multi-jurisdictional review


Looking for more information?
Visit GAO.GOV/GAO-16-362
This work has been released into the public domain.

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