Our 2012 Thou Shall Not Supplant article warned against supplanting federal grant funds, especially as it relates to the Department of Education. That department is hardly alone in its prohibition of supplanting funds that they provide; many federal grants come with the same restrictions. It is time to revisit supplanting vs. supplementing with examples from the Office of Justice Programs (OJP).
The Definition of Supplanting
On its Grants 101 page, the OJP offers this definition of supplanting:
“A state or unit of local government reduces state or local funds for an activity specifically because federal funds are available (or expected to be available) to fund that same activity. When supplanting is not permitted, federal funds must be used to supplement existing state or local funds for program activities and may not replace state or local funds that have been appropriated or allocated for the same purpose. Additionally, federal funding may not replace state or local funding that is required by law.”
Let’s use a down-to-earth example to explore the basic concept. Say that when you were a child, you and your brother worked very hard picking up odd jobs and extra chores so you could buy your parents a gift certificate to their favorite restaurant for their anniversary. Combined you save $50 for your efforts. Your aunt was touched and decided she would contribute $50 to the cause to give them a really nice evening out. Great, you think to yourself, you doubled what you have for the gift certificate. But your brother decides that now you can each keep your part of the original $50 to spend on whatever you want, since you can use your aunt’s $50 for the present. She might have been very disappointed in that decision. Her aim was to increase the value of the gift certificate, pulling back your original contribution undermined her gesture. Likewise, some grants are made with the intent of increasing available funds for a specific objective. To divert already allocated money to something else once a grant is received can defeat the spirit in which it was provided.
Supplanting Defeats the Purpose
The Office of Justice Programs provides the following example of illegal supplanting of federal grant funds: “State Y budgeted $1 million in State funds to be used for renovation of a particular prison. … In response to enactment of the Recovery Act, the State determines that it will use Recovery Act JAG formula funds for the prison renovation, and will use the funds the State had budgeted for the prison renovation instead to provide health services for infants and children. No additional State funds were added to the State budget in any other law enforcement category. Under these circumstances, supplanting would have occurred, as there would have been a decrease in "the amounts of ... funds that would, in the absence of Federal funds, be made available for law enforcement activities"
Supplementing Is the Point
The Office of Justice Programs also provides examples of practices that are allowable, known as supplementing. For instance, a hypothetical city appropriates $25 million for law enforcement activities in given fiscal year. In that same year, they were awarded Recovery Act JAG formula funds. They use the entire $25 million for law enforcement as originally planned, then hire 5 new police officers and 2 new police cruisers with the additional money from the grant. Because the federal funds were used “to increase the amounts of such funds that would, in the absence of federal funds, be made available for law enforcement activities,” it is considered supplementing not supplanting. It stays true to the intention of the award.
The penalties for supplanting can include suspension of future funds for the particular program where the violation occurred, suspension or debarment from all federal grants, repaying the money awarded from the grant and along with further civil penalties. In some cases, there may even be criminal penalties. The Notification of Funding Availability (NOFA) states upfront whether or not the grant you are applying for prohibits supplanting. If something is not clear, it is always better to be safe than sorry and ask questions using the contact information provided.
- Real life situations can become very nuanced and complicated. Here are two sites from the Department of Justice that provide more elaboration and examples besides the ones above on what is and is not allowable.
- U.S. Department of Justice Coordinated Tribal Assistance Solicitation – Provides guidance regarding supplanting for fiscal year 2016 with examples particularly relevant to Native American tribal government.
- Recovery Act Guidance Regarding Supplanting – Contains several examples of do's and don’ts as they relate to the Office of Justice Programs that prohibit supplanting.
- The Department of Justice Customer Service Number = 1-800-458-0786
- Email = firstname.lastname@example.org
Free Compliance Training Videos
- VIDEOS: Uniform Guidance Simplified (Gil Tran, OMB)
- VIDEOS: Uniform Guidance Fundamentals (Victoria Collin, OMB)
- VIDEOS: Question & Answers about Indirect Costs (Panel)
- VIDEOS: Uniform Guidance Indirect Cost Training (Mak Karim, HHS)
- VIDEOS: COFAR Promising Practices (Panel)
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