Leasing equipment is considered an allowable expense under OMB Circular A-87, according to the limitations and conditions of Attachment B, Section 37,

Rental Costs of Buildings and Materials. The limitations include that “sale and lease back” arrangements cannot cost the state or local government more than when it owned the property. The costs include expenses such as depreciation or use allowance, maintenance, taxes, and insurance. A “less-than-arms-length” agreement (i.e., a state government established a corporation to own the property then leases it back to the state) cannot cost the state or local government more than if title had vested in the state or local government. Rental costs under leases which are required to be treated as capital leases under Generally Accepted Accounting Principles (GAAP) are allowable only up to the amount that would be allowed had the state or local government purchased the property on the date the lease agreement was executed. The provisions of Financial Accounting Standards Board Statement 13, Accounting for Leases, determine whether a lease is a capital lease. The determination is based on factors such as if the lease transfers ownership of the property to the lessee by the end of the lease term; contains a bargain purchase option; the lease term is equal to 75 percent or more of the estimated economic life of the leased property unless the lease term falls within the last 25 percent of the total estimated economic life of the leased property; or the present value at the beginning of the lease term of the minimum lease payments excluding executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit, equals or exceeds 90 percent of the excess of the fair value of the leased property to the lessor at the inception of the lease.

No. Section 301(d) of the Help America Vote Act of 2002 (HAVA) requires all States to comply on and after January 1, 2006 with the requirement that each voting system used in elections for Federal office must meet the HAVA Title III, Section 301, voting system standards. The EAC has no authority to extend or waive this statutory deadline. The U.S. Department of Justice, the agency authorized by HAVA to enforce Title III provisions, has made it clear that the agency plans to enforce this deadline. Only the enactment of Federal legislation providing for the extension or waiver of this deadline can change this requirement.

HAVA Section 102(a)(3)(B) permitted States, which had received Title I, Section 102 funds to replace punch card and lever machine voting systems, to file for a waiver of the original November 2, 2004 replacement deadline. Twenty-three of the thirty States that received such funds requested the waiver. The waiver gives these States until the first election for 24 Federal office held on or after January 1, 2006 to replace such systems without risk of losing these Federal funds. The first Federal election would normally be the 2006 primary election for Federal office, unless the State holds an earlier special election for Federal office to fill a vacancy. 

No, Section 251 restrictions will not be lifted on a county-by-county basis. The plain language of Section 251(b)(2) of HAVA requires that the state have implemented the requirements of Title III prior to using more than what the state could have obtained as a minimum payment for activities to improve the administration of elections for federal office. Until Title III requirements are met across the state, the restrictions apply.

While HAVA does not define an election for federal office, the statements of law regarding other election processes are instructive as to the meaning of the term for purposes of HAVA. The Federal Election Campaign Act of 1971 (2 U.S.C. 431 (1) & (3)) includes “primary election held for the selection of delegates to a national nominating convention of a political party” in its definition of the term “election.” However, some states have a definition of federal election that excludes a presidential preference primary.

The State must follow its own laws and procedures regarding the distribution of grant funds when issuing a sub-grant, but must also assure that the sub-grantee is aware of the limitations imposed by the Federal grant. A State must follow its own law as to whether a cost sharing agreement is required or some other form of grant agreement is needed. EAC suggests that there be some documentation that supports the transfer of these funds to the local governments, whether it be a certification by the governments that they will comply with the limitations or that the governments receive funds on a cost reimbursement basis after providing a request for the funds and proof that they were spent in accordance with the State and Federal restrictions. OMB Circular A-102, Common Rule, 41 C.F.R. § 105-71.137, Sub-grants, covers the requirements for States that issue sub-grants of Federal funds. 

No, a state may not use state matching funds to satisfy the requirement that it maintain its effort. Maintenance of effort (MOE) requirements are separate from matching fund requirements. The intent of the MOE requirement is to assure that federal funding increases the amount of funding to a particular program or task and federal funds do not supplant state funds.

The EAC expects the State to repay a pro rata portion of the funds received by the State in compliance with the requirement of Section 102(d). That pro rata portion would be determined by multiplying the percentage of noncompliant precincts with the amount of funding originally received under Section 102.

The Department of Justice has enforcement authority over Title III of HAVA. Any claim, lawsuit, or request for remedies including penalties would be sought against the state for its failure or one of its county’s failure to comply with HAVA, would be brought by the Department of Justice.

No. The EAC will recoup any misspent funds by a subrecipient from the prime recipient.

Yes. Consistent with Section 251(b) to use remaining Title II, Section 251 funds for the improvement of the administration of elections for federal office, the state must submit a certification that all the Title III requirements have been met (not just the voting system requirements) or certify prior to the time that all Title III requirements are met that the state will not use more than the minimum payment amount. States are still required to spend the funds in keeping with the State Plan. If the proposed spending on improving election administration is not reflected in the state plan and represents a material change, the state plan must be amended before spending funds on an allowable activity not identified in the plan.