Micro-Purchase Threshold Self-Certification for 2023-24 Due Oct. 1 (Optional)
Micro sounds like something small, right? However, not following EDGAR purchasing procedures with federal grant funds can lead to BIG problems come audit time. What is a “Micro-purchase threshold,” and why would I want to change it you ask? Today’s topic is about just that, so please read on to consider your options.
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Why would I want to self-certify a higher micro-purchase threshold?
The Education Department General Regulations (EDGAR) defines levels of procurement for federal purchases.
- Micro-purchase (informal methods) – items that you buy in small quantities and are relatively inexpensive
- Small purchase (informal methods) – items that you buy often or in greater quantities and aren’t so expensive as to require board approval or competitive bidding
- Competitive bidding (formal methods) – sealed bids or requests for proposals that are high-cost items reaching the limit where board approval is required
- Sole source (noncompetitive proposal) – rare purchases that only one vendor provides the service and must be approved by TEA
The default micro-purchase limit is $10,000 in aggregate across “like-type” items before “small purchase” procedures kick in. Once the small purchase limit is reached, then 3 documented quotes are required for each purchase. In short, a local decision to raise the micro-purchase limit to a max of $49,999 would result in less collection of quotes.
What is the down-side?
- Obtaining 3 quotes for each purchase results in finding the lowest price. Quotes can save you money in the long run.
- The threshold must be tracked regularly to see when the limit is reached. This is normally accomplished by putting commodity codes on each PO. Auditors ask for commodity codes and check that the threshold limits are being monitored. Granted, this still must be done even if the threshold is kept at $10,000 (unless your practice is just to gather 3 quotes on all purchases).
- The self-certification must be done annually. Using a default of $10,000 requires no extra work on your part.
- If you change the procurement limits, your federal APM manual will need to be updated.
We want to do this. How do I go about self-certifying the higher level?
First, make sure you are eligible. The LEA is eligible to self-certify a micro-purchase threshold between $10,001 and $49,999 if the LEA:
- is a low-risk auditee for their most recent federal audit; or
- conducts an annual internal risk assessment to identify, mitigate, and manage financial risk (and you have written documentation to verify this).
Note: The annual risk assessment conducted by TEA’s Federal Fiscal Monitoring Division cannot be used to meet this requirement.
If the LEA chooses to self-certify a higher micro-purchase threshold, the LEA must notify TEA annually by submitting an online form and maintain the following information for auditors or monitors.
- Current self-certification of an increased micro-purchase threshold, including a justification and clear identification of the new threshold, documented in local board approved policy;
- Written procurement policies updated to reflect the increased micro-purchase threshold; and
- Proof of eligibility, documented annually, of:
- Low risk level from the LEA’s most recent federal audit, OR
- Annual internal risk assessment conducted by the LEA to identify, mitigate and manage financial risks.
The form to send to TEA to increase the micro-purchase limit is located in the EDGAR Forms Smartsheet Workapp. If you do not already have access to the workapp system, click here to request Smartsheet workapp access.
What is the deadline?
If your LEA elects to submit a self-certification to increase the micro-purchase limit, the deadline is Oct 1, 2023 to make it retroactive for the entire 2023-24 budget year back to July 1. If you fail to submit by Oct 1, it will not be retroactive, and you will have to use the $10,000 limit up to your submission date.
Need our help?
- Contact Dr. Sheila K. Sherman, Federal Grants Manager –firstname.lastname@example.org
- Visit the Charter School Community Roundtable, where you can ask questions, get answers and discuss this topic now.