Federal fiscal year is October 1 – September 30.

The term obligation refers to the commitment of funds for case services, agreements, operating expenses, purchase orders, and payroll.

The term de-obligate means to unencumber an authorization/contract or cancel a purchase order.

The term re-obligate means to re-encumber in another fiscal year.

An obligation occurs on the date the State makes a binding written commitment to obtain the goods or services, EXCEPT –

• An obligation must have at least some of the goods purchased or services performed during the federal fiscal year in which it was obligated. 
• This means an obligation completed in one federal fiscal year with a start date in another federal fiscal year is considered obligated in the federal fiscal year of the start date of the obligation.

Obligations cannot exceed one year in length.

CASE SERVICES – An authorization is considered an obligation. Refer to attached Date Chart for guidelines on start/end dates for authorization and payments.

• The obligation is made to the federal fiscal year the authorization is issued, as long as the start date of the authorization is in the same federal fiscal year.

• If the start date of an authorization is in the next federal fiscal year, the obligation is to that federal fiscal year, regardless of when the authorization is completed (see EXAMPLE 3).

• If an authorization has a start date in one federal fiscal year, and the first payment made against the authorization has a start date in the next federal fiscal year, QE2 will not allow payment (at least some of the goods/services must occur during the federal fiscal year in which it was obligated). The authorization will need to be unencumbered (de-obligated) and a new authorization (re-obligation) needs to be completed (see EXAMPLE 4 and 5).

• This process of de-obligating and re-obligating does not create a late authorization. 

• Case service authorizations should not cross federal fiscal years, if it is possible to determine and assign the obligation to the correct federal fiscal year (see EXAMPLE 1).

• Authorizations done in September should have the least amount of goods/services purchased after October 1 as possible. Assign as much of the goods/services to the correct fiscal year as possible.

 

OPERATING EXPENSES – are considered obligated when the service is provided, not when it is billed or paid.

      Utilities– obligated to the federal fiscal year of the start date of the service being paid for

Rent– obligated when the space is used, to the federal fiscal year of the start date of the service being paid for

Registrations– obligated to the federal fiscal year of the start date of the conference

Lodging– obligated to the federal fiscal year of the date stayed

Travel– obligated to the federal fiscal year of the start date of the trip (when the travel occurs)

PURCHASES (Non-Case Services) – obligated on the date the purchase order is signed

PERSONNEL SERVICES (Staff Salaries) – obligated to the federal fiscal year of the start date of the bi-weekly pay period (occurs when the services are performed)

AGREEMENTS – obligated on the date the State makes a binding written commitment to obtain services (date contract is signed) (See EXAMPLE 2). NOTE: Activities occurring in a different fiscal year may occur if a de-obligation and re-obligation of funds is completed.

 

FEDERAL FISCAL YEAR END POLICY EXAMPLES

EXAMPLE 1:  An obligation is completed on April 30 for recurring services between May 1 – November 30. The obligation is to the federal fiscal year in which the obligation was made (April 30). NOTE: October and November services could be paid from the next federal fiscal year if a de-obligation and re-obligation of funds is completed. 

EXAMPLE 2:  The state enters into a contract for services July 1 – June 30. The obligation is to the federal fiscal year to which the obligation was made (July 1), even though ¾ of the services would be provided in the following federal fiscal year (Oct. 1 – Jun 30). NOTE: October – June couldbe paid from the following federal fiscal year only if a de-obligation and re-obligation of funds is completed.

EXAMPLE 3:  An obligation is completed on September 15 with a start date of October 1. The obligation is to the next federal fiscal year (Oct. 1), due to the fact that there would be no goods/services provided in the federal fiscal year in which the obligation was made (Sept 30).

EXAMPLE 4:  An obligation is made on September 15 for medical services to occur between September 20 and October 20. The obligation is to the federal fiscal year in which the obligation was made (Sept 15).  NOTE: If no services occur prior to Oct. 1 (federal fiscal year of the obligation), the funds must be de-obligated and re-obligated in the federal fiscal year in which all the services occurred (Oct. 1) since the obligation must have some benefit to the federal fiscal year in which it is obligated.

EXAMPLE 5:   An obligation is made on September 1 for goods to be purchased between September 15 and October 15. The obligation is to the federal fiscal year in which the obligation was made (Sept 1). At the time of payment, the receipt indicates the purchase was made on Oct 3. The funds must be de-obligated and re-obligated to the federal fiscal year (Oct. 1) in which the purchase was made since the obligation must have some benefit to the federal fiscal year in which it is obligated.