[Federal Register Volume 75, Number 53 (Friday, March 19, 2010)]
[Notices]
[Pages 13265-13268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-6006]


=======================================================================
-----------------------------------------------------------------------

ELECTION ASSISTANCE COMMISSION


Request for Public Comment on Maintenance of Expenditure (MOE) 
Proposed Policy as Amended on 2-19-10

AGENCY: United States Election Assistance Commission.

ACTION: Notice: Request for Public Comment.

-----------------------------------------------------------------------

SUMMARY: The EAC seeks public comment on a Maintenance of Expenditure 
(MOE) Proposed Policy as Amended on 2-19-10. This advisory would 
supersede Advisories 07-003 and 07-003A and fulfill the Election 
Assistance Commission's (EAC) ongoing responsibility to provide 
information on the management of Federal funds provided under the Help 
America Vote Act (HAVA). EAC issues this notice according to a policy 
adopted on September 18, 2008 that requires EAC to provide notice and 
an opportunity for public comment on, among other things, advisories 
being considered for adoption by the U.S. Election Assistance 
Commission.

DATES: Comments must be received by 5 p.m. EST on April 19, 2010.

ADDRESSES: Comments may be submitted: Via e-mail at 
[email protected], and
    Via mail addressed to the U.S. Election Assistance Commission, 1201 
New York Ave, NW., Suite 300,

[[Page 13266]]

Washington, DC 20005, or by fax at 202/566-3127.
    Commenters are encouraged to submit comments electronically and 
include ``MOE'' in the subject line, to ensure timely receipt and 
consideration. All comments must be received by the EAC by the date 
specified above.

SUPPLEMENTARY INFORMATION:  The following is the complete text of the 
Maintenance of Expenditure (MOE) Proposed Policy as Amended on 2-19-10.

Notice: Request for Public Comment on Maintenance of Expenditure (MOE) 
Proposed Policy as Amended on 2-19-10

Policy Overview Statement

    The Help America Vote Act of 2002 (HAVA) requires States to meet an 
annual Maintenance of Expenditure (MOE) (also known as Maintenance of 
Effort) based on State expenditures for activities allowable under 
Title III of HAVA in the fiscal year prior to November 2000. HAVA 
requires that States establish a baseline spending level and then meet 
that spending level each year HAVA section 251 funds are spent by the 
State. The following questions and answers provide details on what is 
required to meet HAVA's MOE requirement and how the U.S. Election 
Assistance Commission (EAC) will work with States to ensure they have a 
realistic, auditable plan for managing MOE requirements.

1. What Is the Purpose of the Maintenance of Expenditures (MOE) 
Requirement Mandated by HAVA?

    The purpose of MOE is to ensure that recipients of Section 251 
funds (requirements payments) use the payments to meet the added 
requirements placed on States by HAVA, while maintaining the level of 
non-Federal funding that was available for those activities during the 
fiscal year ending prior to November 2000.

2. Where in HAVA Is the MOE Requirement?

    Section 254 of HAVA details what must be in the State plan. An MOE 
description is one of the pre-conditions for receipt of a requirements 
payment disbursement. Section 254(a)(7) requires States to identify in 
their plans:
    ``[H]ow the State, in using the requirements payment, will maintain 
the expenditures of the State for activities funded by the payment at a 
level that is not less than the level of such expenditures maintained 
by the State for the fiscal year ending prior to November 2000.'' 42 
U.S.C. 15404(a)(7) (emphasis added).

3. What Does This MOE Policy Do?

    The purpose of this policy is to facilitate State compliance with 
the maintenance of effort (MOE) requirement in HAVA.
    This policy supersedes EAC Advisory drafts 07-003 and 07-003A. This 
policy provides guidelines and assistance for States to develop 
detailed, voluntary plans for identifying a baseline MOE level and 
maintaining that level in subsequent years.

4. Who Is Covered by This Policy?

    This policy applies directly to the 50 States, four U.S. 
Territories and the District of Columbia (referred to as States) that 
are eligible to receive Requirements Payments. This policy may also 
impact ``lower tier'' recipients indirectly (see below). However, 
States are ultimately responsible for demonstrating compliance with 
MOE.

5. What Does the EAC Mean by the Term ``Lower Tier'' Recipients?

    A lower tier recipient is political subdivision of a State. 
Depending on the State, lower tier recipients may include, but are not 
limited to, counties, cities, townships, and other jurisdictions.

6. Do States Need To Account for Lower Tier (Local) Spending During the 
Base Year in Calculating MOE?

    MOE tracks State expenditures on a prescribed set of Federal 
election activities (see question 7), which includes any funds 
appropriated by the State to lower tier entities to support those 
activities. Under this MOE policy, States may exclude lower tier 
spending from MOE when the funds used by the lower tier entities are 
not derived from a State appropriation or expenditure.

7. What Types of Expenditures Must Be Used To Calculate the MOE 
Baseline Amount and Are Eligible To Count Towards Our Annual MOE 
Contribution?

    States must use all election expenditures that are allowable under 
Section 251 of HAVA, and that were funded directly by the State, or 
through a State appropriation to a lower tier entity in the base year, 
to calculate the baseline MOE. All allowable uses under Section 251 of 
HAVA, including: (1) Purchase of voting equipment; (2) development and 
operation of a statewide voter registration list; (3) development and 
implementation of provisional voting for Federal elections; (4) 
provision of information to voters at the polling place on election 
day; (5) verification of information provided by persons seeking to 
register to vote; and, (6) improvement of the administration of 
elections for Federal office should be included in the baseline MOE.
    For example, State X appropriates $10 million for election 
activities eligible for funding under section 251 of HAVA. $2 million 
of the $10 million was appropriated to county Y to provide Federal 
provisional ballots on Election Day. The State's MOE is $10 million 
because it includes all funds appropriated to counties for that year as 
part of its aggregate MOE.

8. When Would the EAC Like To Receive the Voluntary State MOE Plans and 
What Is the Process for Submission?

    EAC would like to receive MOE plans that can be submitted outside 
of the State plan by December 1, 2010. Once your plan is received, 
EAC's grants department will work with your State to develop your MOE 
plan. EAC's hope is to have MOE plans developed by each State that 
chooses to participate in the process in place by January 31, 2011. EAC 
will provide technical assistance, including easy to use templates and 
checklists for developing State MOE plans, by early summer 2010.

9. Does This Policy Include a Set of Uniform Requirements That States 
Must Comply With To Establish a Baseline MOE and Meet Annual MOE 
Requirements?

    While this policy does call for a plan with specific elements for 
establishing, maintaining and reporting on MOE, EAC recognizes that the 
financing and administration of elections includes a particularly 
diverse set of practices that vary from State to State. As such, this 
policy calls for development of State-derived, flexible plans designed 
to meet each individual State's circumstances.

10. Our State Plan Already Acknowledges That We Will Meet the MOE 
Requirements. Do We Still Need To Submit the MOE Plan Discussed in This 
Policy?

    All States have acknowledged in their State plans that they intend 
to meet their MOE requirements. However, these statements do not 
contain information sufficient enough to guide an audit of how the 
State is meeting its MOE requirement. States adoption of detailed MOE 
plans will help ensure that States capture an accurate, defensible 
baseline MOE and are meeting annual MOE requirements. The plans will 
set the basis for auditing MOE and will help ensure that EAC resolution 
of any State-specific audit finding associated with MOE will be

[[Page 13267]]

consistent with how that State has proposed to meet its MOE 
requirement. Submission of the MOE plan described in this document is, 
however, voluntary and may not be the only means of satisfying section 
254a(7) HAVA.

11. What Should a State Include in Its MOE Plan?

    A State's MOE plan should:
    1. Provide the date parameters for the `fiscal year ending prior to 
November 2000' as described in HAVA. This base year will be used to set 
the baseline MOE for the State.
    2. Provide the specific cost factors that make up the baseline MOE, 
or proposed alternative method(s) for determining the baseline MOE.
    3. Establish an MOE baseline dollar level that is an aggregation of 
MOE from all eligible jurisdictions.
    4. Require collection of annual MOE levels from all eligible 
jurisdictions and outline a plan and timeline for collecting this 
information.
    5. Describe the back-up documentation that States and eligible 
lower tier jurisdictions must maintain and make available for 
inspection by EAC upon request in order to substantiate the State's MOE 
claim. Documentation must include a tracking sheet that shows MOE 
baseline and annual MOE levels at the State and eligible lower tier 
recipient levels.
    6. Clearly state the roles and responsibilities of both State and 
eligible lower tier fund recipients for reporting MOE and keeping 
appropriate documentation to substantiate or validate yearly MOE 
levels. Note that both States and eligible lower tier recipients should 
do an annual certification of their MOE contribution.

12. What Is a Baseline MOE?

    The baseline MOE is a dollar amount that captures the level of 
State spending for a particular program or activity in the base year. 
In the case of HAVA, the baseline is the State spending level for a set 
of election's activities (see question 11 below) that was in place in 
the fiscal year ending prior to November 2000.

13. What Dates Should a State Use To Calculate MOE?

    HAVA requires that States use the fiscal year ending prior to 
November 2000 to determine the MOE baseline. States may choose the 
Federal fiscal year, which runs from October 1, 1999 through September 
30, 2000; or the State fiscal year, if it is different from the Federal 
fiscal year.

14. How Do We Know If Our State or Lower Tier Recipient Have an MOE 
Requirement in a Given Year?

    Each State has an MOE obligation in every fiscal year that it 
spends HAVA Requirements Payments funds. Eligible lower tier recipients 
may need to meet MOE in any fiscal year in which they receive 
Requirements Payments through the State, dependent upon how the State 
decides it wants to meet it's annual MOE contribution.

15. What Are the Reporting Requirements Associated With MOE Once a 
State Has an MOE Plan on File With the EAC?

    Pursuant to section 254(a)(12) and section 258(3) of HAVA, each 
State is required to submit as part of its annual report a description 
and analysis of how it has met or exceeded its baseline MOE for the 
preceding fiscal year. Appropriate back-up documentation, as described 
in the State's MOE plan, must be kept on file and made available to EAC 
staff during site visits or to auditors or other officials during an 
audit or investigation.

16. Should Our State Provide a Single, Aggregate Baseline Amount for 
MOE, or a Series of MOE Baseline Amounts for Each Eligible Local 
Jurisdiction?

    EAC's requirement is that States provide a single baseline and 
report an annual aggregate MOE amount. However, because States will 
have to substantiate MOE levels, tracking MOE for all eligible lower 
tier entities that are required by the State to contribute to the MOE 
is will probably be necessary.

17. Do States Have Any Flexibility in How Much Is Spent Annually in 
Each of the Cost Categories Identified by the Plan, or Do They Have To 
Maintain Expenditures in Each of the Categories?

    A State's MOE plan should track expenditures by category to 
identify the MOE baseline and annual contributions. However, this 
policy does not require States and eligible lower tier fund recipients 
to maintain specific expenditures within the identified cost 
categories. This policy clarifies that only the aggregate State MOE 
level needs to be met on an annual basis.
    In meeting the MOE baseline of spending, it is left to the State to 
determine how that baseline is met, as an aggregate. For example, a 
State spent HAVA 251 funds in 2008. In that fiscal year, that State may 
have chosen to expend more of its State funds on its voter registration 
database and less of its State funds on providing information to voters 
at the polls than it did in the fiscal year ending prior to November 
2000. As long as the total baseline MOE is met by adding up all the 
categories, as an aggregate, individual spending for a single category 
does not have to equal the exact amount spent on that category in the 
fiscal year ending prior to November 2000.

18. What Happens If Our State Fails To Meet Its MOE?

    Any audit findings related to a State not meeting its MOE 
requirements will be dealt with through EAC's Audit Resolution Process. 
All current and future audits and compliance site visits that review 
MOE will be guided by the State's MOE plan, from the point plan is 
accepted by the EAC forward.

19. How Can States Establish the Baseline MOE for Lower Tier Recipients 
Where Those Jurisdictions Lack the Records or Detailed Accounting 
Needed To Determine the Level of Spending on Elections in the Base 
Year?

    States may propose an alternative measure for estimating spending 
in the base year, but only after demonstrating that accurate records 
are not attainable. Some alternative measures might include budgeted or 
appropriated amounts, contract amounts, or similar means compiled from 
available records from the base year. States might also estimate 
spending based on average increases over time, but must provide 
adequate justification and documentation to support the estimate.

20. Do These States Have To Collect MOE Information Every Year From 
Eligible Lower Tier Recipients?

    Each State has the ability to determine how it wants to meet its 
MOE obligation. Once the baseline is established by the State, by 
identifying all expenditures with State funds in the base year that 
would have been allowable costs under HAVA, the State will need to 
determine how it would like to meet that MOE obligation on an annual 
basis. If lower tier entities are enlisted by the State to help meet 
MOE (similar to how some counties contribute to State match obligations 
for Requirement Payments) those enlisted entities will have to keep 
appropriate documentation to substantiate their MOE contributions. EAC 
will provide templates that allow for quick recording and roll-up of 
this information to the State level.

[[Page 13268]]

21. How Should States Address Capital Expenditures in the Base Year? 
For Example, Several Counties Purchased Equipment in the Base Year, 
Which Appears To Establish an Unreasonable MOE Baseline for Those 
Jurisdictions

    For purposes of establishing the baseline MOE, HAVA does not make a 
distinction between capital expenditures and recurring costs associated 
with election administration that were incurred in the base year. 
However, when calculating MOE baselines, capital expenditures may be 
expensed in a manner consistent with IRS depreciation tables, over the 
expected life of the equipment purchased.

22. How Do States Establish a Baseline MOE When the Year Before FY 2000 
Was Not an Election Year and the Election Administration Costs in That 
Year Were Lower Than in an Election Year?

    HAVA is clear that the timeframe for setting the baseline MOE is 
the year before November 2000.

23. Does the EAC Have Any Suggestions for How To Enforce MOE 
Requirements With Eligible Lower Tier Fund Recipients?

    States should have several mechanisms available to ensure 
compliance with MOE requirements. Sub-grant agreements should be 
modified to contain MOE requirements and instructions. Any agreements 
to buy and transfer equipment or services to lower tier jurisdictions 
should also contain such a requirement. Finally, States, as the legal 
recipient of HAVA funds, have authority to enforce MOE requirements 
through administrative action which could include withholding future 
requirement payments.

24. Can You Provide an Example of Another Federal Agency That Requires 
Tracking of MOE at This Detailed Level?

    State and local education agencies are required to go through a 
similar process to meet their MOE requirements for Federal funding from 
the U.S. Department of Education.

25. What Type of Assistance and Training Can the States Expect From the 
EAC To Help Implement This Policy?

    EAC grants staff will be available to provide guidance to States on 
their MOE plans. In addition, EAC plans to provide technical assistance 
to develop tools and templates to help capture and track MOE. EAC will 
also publish sample MOE plans from States willing to share their work 
with others as a best practices guideline.

26. What Authority in HAVA Allows EAC To Implement This Proposed 
Policy?

    Section 254(a)(7) of HAVA requires States to include in their State 
plan an explanation of how they will meet their MOE obligations. 
Submitting a State plan and all of its required sections is a 
precondition for receiving a requirement payment. Section 258(3) 
requires States to submit a yearly report that includes an analysis and 
description of the activities funded with Section 251 funds, as well as 
how activities conform to the State Plan under Section 254. This policy 
defines MOE and provides States with a voluntary set of guidelines and 
practices for developing a baseline MOE and tracking yearly progress 
towards meeting that obligation. Section 202(4) of HAVA requires that 
EAC provide information and training on the management of payments and 
grants provided through HAVA.

Thomas R. Wilkey,
Executive Director, U.S. Election Assistance Commission.
[FR Doc. 2010-6006 Filed 3-18-10; 8:45 am]
BILLING CODE 6820-KF-P