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Stacie (Harting) Marsh

About Stacie

What Does “Maintenance of Effort” Really Mean?

Have you ever wondered about that little requirement in federal grant solicitations regarding “Maintenance of Effort”? Should you take it more seriously?

Per Section 797(b) of the Public Health Service Act, the Maintenance of Effort (“MOE”) provision requires federal grant recipients “to maintain non-federal funding for activities described in their application at a level which is not less than expenditures for such activities during the fiscal year prior to receiving the grant or cooperative agreement.” In most cases, federal grantees are required to maintain at least 90 percent of their current non-federal funds during the grant period.

But why?

The underlying principle is to ensure that federal grantees (and cooperative agreement awardees) are committed to maintaining the same level of services already being provided (and as described in their application) after receipt of a federal grant award. (Alas, one of the ironies of grant seeking. You must continue to spend money to get more money.)

More specifically, the federal government wants awardees to rely on state and local funds as much as possible in order to maximize state and local resources thus ensuring that federal funds “supplement” rather than “supplant” (replace) normal activities. (Again, one of those quirks of grant seeking that ensures the funding agency that the grant/cooperative agreement would significantly expand or enhance a program rather than simply keep the lights on.)

The MOE provision is most heavily scrutinized for grant programs requiring cost sharing, which is also known as “matching.” (By the way, it’s a good idea to demonstrate cost sharing regardless of whether or not it’s required.)

What’s the best way to demonstrate MOE?

The best strategy is to provide a detailed account of current and projected non-federal revenue sources. This is typically required in a program budget anyway, but it’s a good idea to make it very clear in a separate table. This should be included in the budget narrative section of your application package.

What happens if you don’t?

Come reporting time, the federal government will assess grant recipients’ MOE status. Those that are not able to uphold their MOE commitment face a loss of a portion of their funding, typically in the proportion by which the grantee failed to meet the MOE. For example, if the grantee meets only 80 percent of MOE, then the federal funds may be reduced by 20 percent. This is why it’s important to take MOE seriously.

It is important to note that there are other definitions of MOE at the federal level. Most significantly, t here is an MOE provision within the Affordable Care Act (ACA) designed to preserve existing Medicaid coverage until the ACA is fully implemented. Specifically, it requires states to maintain their current Medicaid eligibility standards until the state’s health insurance exchange is fully operational. The purpose of the MOE provision is to safeguard families with incomes slightly over the federal poverty level against losing Medicaid/CHIP eligibility before they must transition to subsidized coverage through their state’s health insurance exchanges beginning January 1, 2014. States risk the loss of federal Medicaid funding if they don’t safeguard their poverty-level families until the transition is complete.

What should I do when writing a federal grant?

You should read the request for proposals very carefully, particularly the budget section. This is where you will find information about the agency’s MOE requirements. Then speak with your program director and administrators to ensure that they understand the importance of complying with whatever requirements pertain to each specific grant program.



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