If fully depreciated, yes then it is theirs do with as they wish. HOWEVER, if it still has value then it cannot be donated without Federal permission.
*Federal Permission would be to from the Office of Career and Technical and Adult Education? (OCTAE)
See Capital Asset question below (Can a CA be sold to buy something else?)
April 2025 - situation:
A Community College used Perkins grant funds to purchase a Laser Welder ($27,000) previous fiscal year. Given some unforeseen circumstances, they cannot and will not use the equipment and it is still boxed and in brand new condition. The company they purchased it from was notified but they will not take the equipment back. The CC reached out us to determine what options they may have, including selling the equipment and purchasing something they can now use for the same program.
Below are the Federal regulations related to selling equipment (2 CFR 313e). They are fairly vague/sometimes contradictory and why ED thought we should consult with you.
Questions in orange are from Tom related to potential options we may be able to provide.
(e) Disposition. When equipment acquired under a Federal award is no longer needed for the original project, program, or for other activities currently or previously supported by a Federal agency, the recipient or subrecipient must request disposition instructions from the Federal agency or pass-through entity if required by the terms and conditions of the Federal award. Disposition of the equipment will be made as follows, in accordance with Federal agency or pass-through entity disposition instructions:
(1) Equipment with a current fair market value of $10,000 or less (per unit) may be retained, sold, or otherwise disposed of with no further responsibility to the Federal agency or pass-through entity.
Can they buy the piece of equipment with their general funds and then sell the equipment as they wish and purchase what they need?
(2) Except as provided in § 200.312(b), or if the Federal agency or pass-through entity fails to provide requested disposition instructions within 120 days, items of equipment with a current fair market value in excess of $10,000 (per-unit) may be retained or sold by the recipient or subrecipient. However, the Federal agency is entitled to an amount calculated by multiplying the percentage of the Federal agency's contribution towards the original purchase by the current market value or proceeds from the sale. If the equipment is sold, the Federal agency or pass-through entity may permit the recipient or subrecipient to retain, from the Federal share, $1,000 of the proceeds to cover expenses associated with the selling and handling of the equipment.
They can sell the equipment this way however they would be out all the money except for $1,000 selling costs. They would need to return all funding to the federal government.
(3) The recipient or subrecipient may transfer title to the property to the Federal Government or to an eligible third party provided that the recipient or subrecipient must be entitled to compensation for its attributable percentage of the current fair market value of the property.
Could they transfer to another entity (i.e. UNL, SCC, UNO, etc) and the money they get from entity sold to then use that money to purchase what they need? Who is an “eligible third party”?
Equipment costing $5000 or more per item = 700 category Capital Assets. Equipment costing $4,999 or less per item = 600 category Supplies.
* It is not permissible to purchase residential grade equipment and seek Perkins reimbursement.
YES! Shipping cost is considered as part of the asset's acquisition cost.
If an equipment item purchased with Grant funds costs $4700, the additional $500 shipping the organization sold the asset tomorrow, they would likely view their total investment as $5,200, (a State Capital Asset) not just the $4,700 purchase price. The shipping cost was incurred to obtain the asset and place it into their possession.
Similarly, when determining the original cost basis of an asset, organizations typically include costs that are necessary to acquire and place the asset into service, such as:
Purchase price
Freight/shipping
Delivery charges
Installation costs
Other costs necessary to place the asset into service
In this example:
Equipment cost: $4,700
Shipping cost: $500
Total acquisition cost: $5,200
Based on that total acquisition cost, the item to meets the $5,000 capital asset threshold. Since the shipping was necessary to acquire the equipment, you would not separate it from the asset's cost solely for purposes of determining whether the capitalization threshold was met.
Items purchased with Perkins funds can be disposed of following the school’s own “Accounting Depreciation Procedure for Disposing of School Inventory.” The NDE does not determine the depreciation cycle for equipment, rather, it is left up to the ESU’s and district’s policies. In most cases it means keeping track of the item in their accounting records for 5-7 years. (5 years for a Perkins federal audit.) *The key is the actual value of the equipment now, not the depreciated value.
Equipment that is no longer functional and can’t be upgraded or updated essentially has a value of “$0”. Keep documentation on file that indicates the item, inventory number and explanation that it has no value and was disposed of on such and such date.
Equipment with a depreciated value of “$0” can be sold, however documentation must be on file and the proceeds have to be refunded into the CTE program.
What happens if an LEA cannot locate a piece of equipment purchased with Perkins funds?
For items purchased as a Capital Asset, NDE will need a list of the missing items so that they can be turned into NDE's Compliance and Audit Team.
From there a determination of next steps will be decided will notify the districts responsible for the equipment.
Are Exhaust Hoods for culinary arts programs and hooked up to the school’s exhaust system considered construction?
Yes, using Perkins funds, this would be considered construction and would need to follow Davis Bacon rules and regulations. An alternative system or using State CTE funds would be preferable.
In most cases, yes, however if an item is made of several different parts that are not dependent on each other and can be used independently on their own, then categorizing the kit can be made under 600-Supplies.
If none of the individual items are over $5000 each, but they are all dependent on being ordered together to run the equipment that totals over $5000- then they need to be categorized as 700s-Equipment.
See Vehicles in the Perkins Management Guide.
Justification for approval indicating how the cost is necessary and reasonable and allocable to the grant will be required. Decisions will be made on a case-by-case basis. Specific information necessary for consideration includes:
A detailed description of how the vehicle purchase is “reasonable and necessary” and will only be used for Perkins-related activities.
The purchase must be justified for instructional purposes only (transportation of faculty or students is not permitted)
Documentation and certification of any miles driven and justified as instructional only (student instruction)
In 2 CFR part 200 (Federal guidelines) it states that recipients should assess whether it is a better deal to buy or lease the vehicle. Is there possibility of getting the vehicle donated, developing partnerships for a future donation, if/how costs may be shared (not just a grant funded purchase), etc.?
What will the replacement plan entail? Has this been run past the risk management department?
What is the policy for use of the vehicle at a reasonable and justified rate? See CFR 200.313 (c)(2)
If the vehicle is later sold, that amount will need to be returned to the NDE and NDE will then need to send the funds back to the Federal granting agency.
Approval would be on a case-by-case basis.
Probably - with proper documentation and prior approval.
Equipment purchased with Perkins funds in part by a district and in part by the Consortium should follow OCTAE guidance: Review 2 CFR 200.313 (Equipment) of the Uniform Guidance. When it is time for this item to be sold or disposed of, it will be important there are records of the proportional amount of Perkins funds that were used in the acquisition of the equipment.
Management requirements, at a minimum, must meet the following requirements:
Equipment purchased with Perkins grant funds can only being used for approved CTE programs and services.
Equipment purchased by a consortium remains the property of the consortium and is to be made available to all consortia members. It is strongly recommended that these equipment purchases be made by the consortium.
Property Records must be maintained that include a description of the property, a serial number or other ID number, the source of funding (including the FAIN (Federal Award Identification Number), who holds the title (Consortium), acquisition date, cost of the property, Percentage of Federal participation in the project costs for the Federal award under and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Inventory Records need to be obtainable at both entities: the consortium and the district fiscal offices.
A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years.
A control system must be developed to ensure adequate safeguards to prevent loss, damage or theft of the property. Any loss, damage or theft must be investigated.
Adequate maintenance procedures must be developed to keep the property in good condition.
If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible level of return.
No. From the Perkins grant perspective, the main concern is that the capital asset is being used for CTE programs and services, that the cost is reasonable and necessary, and that it is allocable to the grant.
Yes and the Federal requirements would still need to be followed.
Management requirements, at a minimum:
Equipment purchased with Perkins grant funds can only being used for approved CTE programs and services.
Equipment purchased by a consortium remains the property of the consortium and is to be made available to all consortia members. It is strongly recommended that these equipment purchases be made by the consortium.
Property Records must be maintained that include a description of the property, a serial number or other ID number, the source of funding (including the FAIN (Federal Award Identification Number), who holds the title (Consortium), acquisition date, cost of the property, Percentage of Federal participation in the project costs for the Federal award under and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Inventory Records need to be obtainable at both entities: the consortium and the district fiscal offices.
A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years.
A control system must be developed to ensure adequate safeguards to prevent loss, damage or theft of the property. Any loss, damage or theft must be investigated.
Adequate maintenance procedures must be developed to keep the property in good condition.
If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible level of return.
Is it allowable to a new pickup truck to deliver Welding lab materials to labs throughout a 4-county service area in order to increase the size and scope of CTE programming? This will be dedicated to and only used to support Welding department and programming.
Yes. See CTE's Administrators Guide to follow the preapproval requirements and meet the controls for procurement and capital assets and depreciation.
Yes.
Rental costs under “sale and lease back” arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance.
Unallowable costs include costs that would not have been incurred if the recipient or subrecipient had purchased the property, such as amounts paid for profit, management fees, and taxes.
Rental or lease payments are allowable under lease contracts where the recipient or subrecipient is required to recognize an intangible right-to-use lease asset under GASB standards or right-of-use operating lease asset under FASB standards for purposes of financial reporting in accordance with GAAP.
The rental of any property owned by any individuals or entities affiliated with the recipient or subrecipient, including commercial or residential real estate, for purposes such as the home office is unallowable.