Accounting Policies: 1. The accompanying schedule of expenditures of federal awards (“SEFA”) includes the federal award activity of the Arkansas Development Finance Authority (the “Authority”), a component unit of the State of Arkansas, under programs of the federal government for the year ended June 30, 2023. The information in the SEFA is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”). Because the SEFA presents only a selected portion of the operations of the Authority, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Authority.
2. Expenditures reported on the SEFA are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, the cost principles in Office of Management and Budget A-110 or the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Authority has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.
3. Expenditures reflected in FAL 10.415, Preservation Revolving Loan Fund, include loans to contractors for development of multi-family housing. The funding sources for these loans are two $2,125,000 promissory notes executed between the Authority and U.S. Department of Agriculture Rural Development during fiscal year 2013 and fiscal year 2016. When received, the funds were used to make new loans for program activities. The outstanding loan receivable balance was $3,319,936 for the year ended June 30, 2023. There were no disbursements for loans made during the year ended June 30, 2023, as all funding commitments have been fully disbursed for this program in prior years.
4. Expenditures reflected in FAL 14.239, HOME Investment Partnerships Program, include loans to contractors and borrowers for development of single-family and multi-family housing. The funding source for these loans includes federal grant funds and revolving program funds. The funds are disbursed after expenses have been incurred as forgiveness of principal and repayable loans. The outstanding loan receivable balance was $108,643,201 for the year ended June 30, 2023. Total disbursements of federal funds for repayable loans totaled $2,647,145 during the year ended June 30, 2023.
5. The federal loan programs listed subsequently are administered directly by the Authority, and balances and transactions relating to the programs are included in the Authority’s basic combined financial statements. Notes payable outstanding at the beginning of the year and federal expenditures during the year are included in the federal expenditures presented in the SEFA. The balance of the notes payable outstanding at June 30, 2023 consists of:
Outstanding Balance
Reference Number Program Name at June 30, 2023
10.415 Preservation Revolving Loan Fund $3,242,419
6. Federal interest and special allowance subsidies for Arkansas Student Loan Authority are included in loan interest and special allowance expense in the Authority’s combined financial statements.
ARKANSAS DEVELOPMENT FINANCE AUTHORITY, 60
A COMPONENT UNIT OF THE STATE OF ARKANSAS
Notes to Schedule of Expenditures of Federal Awards (cont.)
For the Year Ended June 30, 2023
7. Education loans made or purchased by the Authority are guaranteed by the Great Lakes Higher Education Corporation (“Great Lakes”), United Student Aid Funds (“USAF”), or the U.S. Department of Education (“USDE”). Student loans guaranteed by the federal government are considered noncash awards, which amounted to $111,022,493 at July 1, 2022. The Great Lakes, USAF, and USDE guarantees are contingent upon the loans being serviced within the due diligence requirements of the guarantors and loan services.
8. Expenditures reflected in FAL 14.275, Housing Trust Fund, include loans to contractors for development or redevelopment of affordable housing, particularly rental housing for extremely low income and very low income households. The funding source for these loans is federal grant funds. The funds are disbursed after expenses have been incurred as forgiveness of principal and repayable loans. The outstanding loan receivable balance was $5,967,376 for the year ended June 30, 2023. Total disbursements for repayable loans made were $1,143,750 during the year ended June 30, 2023.
9. Expenditures reflected in FAL 21.026, Homeowner Assistance Fund, include disbursements to prevent homeowner mortgage delinquencies, defaults, utilities delinquencies, and expenses for the administration of this program. The funding source for these expenses was federal grant funds.
De Minimis Rate Used: N
Rate Explanation: See significant accounting policies