Session #61

What’s going on with the

Federal Fund

Katrina Turner
Barbara Johnson
Agenda
• What is the Federal Fund
• Federal Fund Reporting
Requirements
• Uses of Data
• Management Plan
• Impacts to the Federal Fund
• Reconciliation of Annual GAFR Data
to Guaranty Agency’s Financial
Statements
What is the Federal Fund
• Federal fund reflects all assets
held by the guaranty agency and
is the property of the United
States
• GA’s are required to maintain
fiduciary responsibility
Federal Fund Reporting
Requirement
• Annual Report

–Data is reported as of
September 30 on an accrual
basis and is due by Dec 1
Uses of Data
• Monitor guarantor’s financial
activities;
–Federal & Operating Fund Balances
–Minimum Reserve Ratio
–Projections
• ED’s financial statements;
• Reasonability to NSLDS data;
• Minimum Reserve Ratio; and
• Trigger Rate
Management Plan
• Guaranty Agencies are required to
submit a management plan when
the Secretary determines that the
administrative or financial condition
of the agency is in jeopardy
• Indicators
–Minimum Reserve Ratios
–Declining Federal Fund
–Operational Issues
Management Plan (Con’t.)
• What is included in a
Management Plan

Business Overview

•Agency description
•Business model
•Challenges
Management Plan (Con’t.)

•Competitors
•Unique characteristics and
factors leading to financial
instability
Management Plan (Con’t.)
Business Plan

• Specific actions taken or proposed

to re-establish financial stability
• Target Dates
• Performance Measures
• Financial projections for Federal
Fund and Operating Fund (3 to 5
yrs)
Management Plan (Con’t.)

•Recommendations for
assistance and reporting
progress status to the
Department
•Audited Financial Statement
for the last 2 years
Management Plan (Con’t.)
• Next Steps

–Submittal
–Review
–Approval
–Monitor
–Exit Strategy
Impacts to Federal Funds
• Account Maintenance Fee (AMF)

Authority to Transfer funds

was rescinded July 1, 2006
Impacts to Federal Funds
• Default Aversion Fee (DAF)

Permitted to Transfer DAF

from Federal fund to Operating
fund per lender’s request for
default aversion on the loan
Impacts to Federal Funds
• Federal Default Fee

Requires Collection of 1% for

loans guaranteed on/after July 1,
2006
Requires deposit of fee into GA
Federal fund
GA may collect from borrower or
pay from non-Federal sources
Impacts to Federal Funds
• Reserve Recall

Final installments of the $250

million Federal reserve recall
as required by Section 422(i)
of the HEA, (as amended) and
held by GA’s were received as
of Sept 1, 2007
Impacts to Federal Funds
• Under/Over reporting of
Rehabilitated Loans

Excess payments in the

Federal fund due to incorrect
method of calculating the
reinsurance complement for
rehabilitated loans
Impacts to Federal Funds
Incorrect reporting identified
during program review or self
reported by GA
GA must request the
Department’s approval prior to
transferring funds from the
Federal fund to the Operating
fund
Impacts to Federal Funds
How to Request the Funds?

List of Required Documentation

 Amounts that should have been
deposited/reported vs. Amounts that
were deposited/reported
 Proof that the funds were actually
deposited into the Federal Fund
(Examples may include deposit receipts)
 Reimbursement rate the GA used to
calculated the incorrect amount
Reconciliation of Annual
GAFR Data to Guaranty
Agency’s Financial
Statements
• Requests for GA Financial
Statements
–Annually
–6 months after audit period ends
• Review/Analysis
Contact Information
We appreciate your feedback and
comments. We can be reached at:
Katrina Turner Barbara Johnson
202.377.3311 202.377.3327

Email address
Katrina.Turner@ed.gov
BJ.Johnson@ed.gov

Fax: 202.275.0913