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CARE Act Title II Manual - 2003 Version

II. Grants Administration

3. State Matching Fund Requirements 

Introduction

1. State Matching Definitions
2. Legislative Background
3. HAB/DSS Expectations
4. Determining the Rate of the State Match
5. Determining Elements that Constitute the State Match
6. Title II Grantee Documentation Requirements
7. Monitoring and Compliance

Chapter 3
State Matching Fund Requirements

Introduction  TOP

The CARE Act requires certain States to match their Title II grant. This-along with other legislative requirements like maintenance of effort-is designed to assure a concomitant level of State support for HIV/AIDS care.

The matching requirement applies to States with more than one percent of the U.S. AIDS cases reported for the two most recent fiscal years. They must match the Title II grant received (i.e., Title II base award, ADAP earmark, and emerging communities awards). The rate of matching is specified in the legislation and ranges from a low of $1 for each $5 of Federal funds to a maximum of $1 for each $2 of Federal funds. The required matching rate is based on the number of years the State meets the one percent threshold.

State Matching Definitions  TOP

Legislative Background  TOP

Section 2617(d) of the CARE Act requires the following:

(1) In general.-In the case of any State to which the criterion described in paragraph (3) applies, the Secretary may not make a grant under this part unless the State agrees that, with respect to the costs to be incurred by the State in carrying out the program for which the grant was awarded, the State will, subject to subsection (b)(2), make available (directly or through donations from public or private entities) non-Federal contributions toward such costs in an amount equal to-

(A) for the first fiscal year of payments under the grant, not less than l62/3 percent of such costs ($1 for each $5 of Federal funds provided in the grant);

(B) for any second fiscal year of such payments, not less than 20 percent of such costs ($1 for each $4 of Federal funds provided in the grant);

(C) for any third fiscal year of such payments, not less than 25 percent of such costs ($1 for each $3 of Federal funds provided in the grant);

(D) for any fourth fiscal year of such payments, not less than 331/3 percent of such costs ($1 for each $2 of Federal funds provided in the grant); and

(E) for any subsequent fiscal year of such payments, not less than 331/3 percent of such costs ($1 for each $2 of Federal funds provided in the grant).

(2) Determination of amount of non-federal contribution.-

(A) In general.-Non-Federal contributions required in paragraph (1) may be in cash or in kind, fairly evaluated, including plant, equipment, or services. Amounts provided by the Federal Government, and any portion of any service subsidized by the Federal Government, may not be included in determining the amount of such non-Federal contributions.

(B) Inclusion of certain amounts.-

(i) In making a determination of the amount of non-Federal contributions made by a State for purposes of paragraph (1), the Secretary shall, subject to clause (ii), include any non-Federal contributions provided by the State for HIV-related services, without regard to whether the contributions are made for programs established pursuant to this title;

(ii) In making a determination for purposes of clause (i), the Secretary may not include any non-Federal contributions provided by the State as a condition of receiving Federal funds under any program under this title (except for the program established in this part) or under other provisions of law.

(3) Applicability of requirement.-

(A) Number of cases.-A State referred to in paragraph (1) is any State for which the number of cases of acquired immune deficiency syndrome reported to and confirmed by the Director of the Centers for Disease Control and Prevention for the period described in subparagraph (B) constitutes in excess of 1 percent of the aggregate number of such cases reported to and confirmed by the Director for such period for the United States.

(B) Period of time.-The period referred to in subparagraph (A) is the 2-year period preceding the fiscal year for which the State involved is applying to receive a grant under subsection (a).

(C) Puerto Rico.-For purposes of paragraph (1), the number of cases of acquired immune deficiency syndrome reported and confirmed for the Commonwealth of Puerto Rico for any fiscal year shall be deemed to be less than 1 percent.

(4) Diminished state contribution.-With respect to a State that does not make available the entire amount of the non-Federal contribution referred to in paragraph (1), the State shall continue to be eligible to receive Federal funds under a grant under this part, except that the Secretary in providing Federal funds under the grant shall provide such funds (in accordance with the ratios prescribed in paragraph (1)) only with respect to the amount of funds contributed by such State.

Section 2618(I)(ii) outlines supplemental drug treatment grants as follows:

(I) In general.-From amounts made available under subclause (V), the Secretary shall make supplemental grants to States described in subclause (II) to enable such States to increase access to therapeutics described in section 2616(a), as provided by the State under section 2616(c)(2).

(II) Eligible states.-For purposes of subclause (I), a State described in this subclause is a State that, in accordance with criteria established by the Secretary, demonstrates a severe need for a grant under such subclause. In developing such criteria, the Secretary shall consider eligibility standards, formulary composition, and the number of eligible individuals at or below 200 percent of the official poverty line to whom the State is unable to provide therapeutics described in section 2616(a).

(III) State requirements.-The Secretary may not make a grant to a State under this clause unless the State agrees that-

(aa) the State will make available (directly or through donations from public or private entities) non-Federal contributions toward the activities to be carried out under the grant in an amount equal to $1 for each $4 of Federal funds provided in the grant; and

(bb) the State will not impose eligibility requirements for services or scope of benefits limitations under section 2616(a) that are more restrictive than such requirements in effect as of January 1, 2000.

(IV) Use and coordination.-Amounts made available under a grant under this clause shall only be used by the State to provide HIV/AIDS-related medications. The State shall coordinate the use of such amounts with the amounts otherwise provided under section 2616(a) in order to maximize drug coverage.

(V) Funding.-For the purpose of making grants under this clause, the Secretary shall each fiscal year reserve 3 percent of the amount referred to in clause (i) with respect to section 2616, subject to subclause (VI).

(VI) Limitation.-In reserving amounts under subclause (V) and making grants under this clause for a fiscal year, the Secretary shall ensure for each State that the total of the grant under section 2611 for the State for the fiscal year and the grant under clause (i) for the State for the fiscal year is not less than such total for the State for the preceding fiscal year.

HAB/DSS Expectations  TOP

States (with the exception of Puerto Rico) required to match the Title II grant received (according to a schedule based on the number of years of payment under the grant) include those for which the number of AIDS cases reported to and confirmed by the CDC for the two most recent fiscal years exceeds one percent of the total reported AIDS cases for the two most recent fiscal years.

The Secretary may not make grants to a State with more than one percent of the reported AIDS cases for the two most recent fiscal years unless the State agrees to make available non-Federal contributions and match the Title II grants received. The matching amount includes non-Federal contributions such as cash or in-kind contributions provided directly by the State or through donation from public or private entities. In making a determination of the amount of non-Federal contributions made by a State, the Secretary shall include any non-Federal contributions provided by the State for HIV-related services without regard to whether the contributions are made specifically for CARE Act programs. If a State provides matching funds/assets, but the rate of matching is not at the level prescribed in the Act, the Title II grant is reduced to achieve the required matching ratio.

Title II grants include Title II base, ADAP earmark, and emerging communities funds. Non-Federal contributions could include contributions from pharmaceutical manufacturers to State ADAPs and may include rebates. In the grant domain, funds where the original source of any non-State appropriated dollars is Federal may not be included.

Determining the Rate of the State Match TOP

Section 2617(d)(1) establishes the rate of State matching based on the number of fiscal years the State has received CARE Act funding, beginning with the fiscal year in which the State exceeded the one percent threshold of reported AIDS cases for the two most recent fiscal years.

Program experience shows that a small number of States have been above and then fallen below the one percent threshold over different fiscal years. A State that meets the one percent threshold in a particular fiscal year and then falls below that threshold in a subsequent fiscal year, is not required to meet the matching fund requirement in the year in which it is below the threshold. If, however, the State subsequently meets the threshold again, only the years in which that State meets the one percent threshold are counted in determining the required rate of match. As an example, if a State exceeded the one percent threshold in FY 1999 and fell below the one percent threshold in FYs 2000 and 2001 and then again exceeds the one percent threshold in FY 2002, the State would be required to match at the rate of $1 for each $4 (i.e., the rate of match for year 2) in FY 2002.

Defining Elements that Constitute the State Match  TOP

The items or elements that a State may count toward its match requirement are defined in general terms in the legislation. DSS and GMB, in agreement with the Office of General Counsel, have more specifically interpreted HIV-related services to include "a spectrum of HIV activities such as care and treatment (including State contributions to CARE Act-funded programs), prevention, surveillance and research."

To be accepted, all matching contributions, including cash and in-kind, shall be allowable under the applicable cost principles (OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments). Such costs are subject to audit for the purposes of establishing compliance with the State match requirement.

Title II Grantee Documentation Requirements  TOP

Since the Secretary may not make a grant under Title II unless the State agrees to make available the required match, the State must provide documentation with its Title II application that such match requirements will be met. This documentation includes signed assurances, which include the agreement to meet the required State match, and specific information submitted as per instructions found in the Title II Application Guidance for States.

Title II grantees are also required, 90 days after the end of each budget period, to submit a final Financial Status Report (FSR). Items 10b (Recipient Share of Outlays) and 10e (Recipient Share of Unliquidated Obligations) of this report document that the required State match for the grant has been met (i.e., the requirement is met when the sum of 10b and 10e equals the required State match amount). In addition, starting with the FY 1997 final progress report due 30 days after the end of the budget period, States must describe the activities, personnel, and other object class categories actually supported through use of matching funds.

The matching requirement is in proportion to the amount of grant funds actually expended. Thus, in cases where the Title II grant has not been fully expended, the State match amount will be less than that amount cited in the original Notice of Grant Award. Any carryover amount approved for use in future grant budget periods will automatically increase the amount of State match required for that fiscal year, even if in the previous year the State match was at a level higher than that required by the level of expenditure.

Monitoring and Compliance  TOP

Future awards will be unaffected for those States submitting a FSR and final progress report indicating the required State match has been met and how, as outlined in the previous section. If a State submits an FSR indicating a level of recipient outlays and unliquidated obligations below the required State match, subsequent grant awards will be offset by the appropriate proportional amount. The amount by which the grant is offset will be reallocated to other Title II grantees.