Equipment and renovation costs may make up a big portion of a community health center’s new access point budget. There is no doubt that necessary equipment or small renovations can be costly but applicants should consider if using federal funds from new access point (NAP) grants to purchase equipment or make minor renovations is worth the extra work.
What you need to know about new access point grants
People may be familiar with the fact that funds from the federal government come tied with required inventory and tracking that can be onerous. There may also be a “Federal interest” on the property. What you may not realize is that in addition to this reporting burden, using the one-time only funds for new access point grants may significantly reduce the funding amount of the initial award.
Purchasing healthcare equipment or taking care of minor renovations with New Access Point grants and a one-time only $150,000 grant can be very beneficial for your health care center.
How does a one-time $150,000 grant work?
In the last rounds of NAP grants on behalf of a Health Center Solutions client, the client needed funding for equipment for a new clinic site. They opted to budget $150,000 in one time funding out of the total $650,000; the grant was funded on the second round of awards. Instead of being awarded as a two year project period ($650,000 per year) the grant period was 22 months long. HRSA prorated the operating funds ($500,000) over the 22 month period. If they had not requested the $150,000 for equipment their total award for the 22 month project period would have been an additional $125,000.
Why? When HRSA prorated the operating funds, they used only $500,000 per year ($650,000 total minus $150,000 equipment equals $500,000 operations). The $500,000 equates to $41,666 per month for operations. When HRSA prorated the total award over a 22 month period, they used this monthly amount for the operations. If there had been no equipment purchased, HRSA would have figured the monthly rate amount on the full $650,000 ($54,167). The prorated 22 month award would have been $1,191,667, or an additional $125,000.
In subsequent years, the recommended funding will be at $650,000, but for the initial 22 month project period, that’s a big loss.
Equipment and supplies– as defined by the Federal Government:
Equipment is tangible nonexpendable personal property including exempt property charged directly to the award and having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.
Items that do not meet the definition / threshold for equipment are considered supplies. Supplies are defined as all personal property excluding equipment and tangible property, with an acquisition cost of less than $5,000 per unit.
If Federal funds are used to purchase equipment these property management rules apply:
- The title of the equipment is kept with the recipient;
- HRSA, always reserves the right to order the transfer of the title of the equipment back to HRSA or third party named by HRSA (recipient will be reimbursed for its share in the value);
- State laws and procedure govern use, management and disposal of equipment acquired by a state under an award;
- The equipment must be used for the project as long as needed for the original approved activity, even if award support ends; and
- The equipment may not to be used as collateral for a loan.
Note: Sub-recipients of equipment purchased with Federal dollars also receive the title to the equipment and must follow all of the same property management rules as recipients.
Federal interest is the Federal government’s share in a property, supplies or equipment based on the Federal funding that was used to purchase or upgrade said property, supplies or equipment.
What is Notice of Federal Interest in regard to real property?
There is a good chance that the grantee’s property will be used to deliver health care services long after a grant is closed. When the Federal Government has provided funding for substantial property construction that results in an increase of square footage or major renovations that cost more than $500,000 (excluding moveable equipment costs), the grantee may be required to attach a lien to the property called a Notice of Federal Interest (NFI). The NFI protects the Federal Government’s interest in the property, but also protects the intent for which the funds were originally awarded.
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