Background
The federal Office of Budget and Management (OMB) released new changes to the federal Uniform Grant Guidance (UGG) that is incorporated into the Education Department General Administrative Regulations (EDGAR) last summer with an effective date of new grant awards issued by the federal government on or after October 1, 2024.
For all LEA across the state, the revised UGG and revisions become effective tomorrow, July 1, 2025.
While many of the new regulations are increased flexibility and spending threshold changes, LEAs are required to update their policies and procedures appropriately to ensure compliance with the updated federal regulations, as TEA will begin to monitor LEAs in line with these revised regulations beginning at the start of our fiscal monitoring cycle in 2026. TEA federal grant monitoring reviews will issue findings related to the changes implemented starting July 1, 2025.
LEAs must ensure that their policies have been updated and approved appropriately to show compliance with the revised regulations.
Key Impacts
Below are a few of the key impacts for LEAs. LEAs must ensure compliance with all the changes related to UGG and EDGAR.
- Prior approval for participant support costs has been removed. This change requires LEAs to define participants in their various federal programs, and specify what participant costs they are going to charge consistently to their federal awards. LEAs are required to write policies and procedures related to this change and implement them consistently across all federal grant programs.
- The modified total direct cost (MTDC) threshold for use in determining your indirect cost rate for grants has increased from $25,000 to $50,000. The LEA may now claim indirect costs on the first $50,000 of each subcontract funded with grant funds rather than the lower amount.
- Subrecipients are required to amend their grant application if changes to key personnel (including employees and contractors) that are identified by position in the federal grant application.
- The definition of equipment has changed the initial purchase price from $5,000 per unit or local acquisition threshold, whichever is lower to $10,000 per unit or local acquisition threshold, whichever is lower. LEAs will need to quickly determine if they will continue to utilize the federal definition of equipment or make a more restrictive policy to remain at the $5,000 threshold or different local acquisition threshold amount. Refer to the January 30, 2025, To the Administrator Address (TAA) letter which states: "This letter supersedes current Financial Accountability System Resource Guide (FASRG) rules 1.2.4.3 Capitalization of Assets referring to the $5,000 threshold per unit cost for capitalized assets. The FASRG will be updated to reflect this change in April of 2026. The new per unit cost will be increased to $10,000 to align with the federal changes outlined in this letter. "
- Disposition of equipment has been revised to be for equipment that has a current fair market value (CFMV) per unit of $10,000. This disposition threshold is regardless of what your local capitalization threshold is, as the regulation simply states $10,000.
- Disposition of supplies has been revised to only be required for new, unused, or unopened supplies with a current fair market value (CFMV) of $10,000. This disposition threshold is regardless of what your local capitalization threshold is, as the regulation simply states $10,000.
- Conflict of interest requirements in General Procurement Standards (2 CFR 200.318) now includes board members, as such board members must meet all of the conflict of interest requirements outlined (such as not receiving gratuities, favors, or anything of monetary value from contracts, ensuring that disciplinary actions are applied to board members, etc).
- The term small purchase has been updated and now is referred to as simplified acquisitions, the method of procurement did not change, however the term is updated and must be updated in local policies and procedures.
- 2 CFR 200.321 Contracting with small businesses, minority businesses, women's business enterprises, veteran-owned businesses, and labor surplus area firms, now includes veteran-owned businesses and the language was updated to state that when possible, the subrecipient should prioritize to include these groups of potential vendors.
- Prohibition on using geographic preferences in procurements was removed.
- Citation for Time and Effort (T&E) was updated to 2 CFR 200.430(g). The only other change to T&E is the language change (2 CFR 200.430(g)(1)(vii)(C)) to state: The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates.”
- Entertainment and prizes are not allowable unless they have a specific and direct programmatic purpose and are included in the terms and conditions of the Grant Award Notice (GAN) that TEA receives from USDE.
- 2 CFR 200.472 Termination and standard closeout costs added a section of flexibility that allows for administrative closeout costs to be charged to the grant being closed:
- may be incurred until the due date of the final report,
- liquidated prior to the due date of the final report, and
- charged to the final budget period of the award
- The threshold for requiring a federal single audit increased from $750,000 total expenditures in federal funds per the LEA’s fiscal year to $1 million of federal expenditures. This updated threshold goes into effect with federal grant expenditures in your new FY 2026.
EDGAR Connect WorkApp
For a limited time tomorrow, July 1, 2025, TEA's EDGAR Connect WorkApp will not be available for submission as we finalize updates to reflect the updated guidance. The outage will last from 8am to 1pm CST.
Contact Information
For federal grant information and guidance on the new regulations, please contact Nick Davis (nick.davis@tea.texas.gov) in the Department of Grant Compliance and Administration.
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