SECTION 2: Funding Process and Requirements

2.1 Summary

The Emergency Solutions Grants (ESG) Program was created when the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act was signed into law on May 20, 2009. The Hearth Act amended and reauthorized the McKinney-Vento Homeless Assistance Act and included major revisions to the existing Emergency Shelter Grant Program.

The new Emergency Solutions Grant Program is designed to identify sheltered and unsheltered homeless persons, as well as those at risk of homelessness, and provide the services necessary to help those persons to quickly regain stability in permanent housing after experiencing a housing crisis and/or homelessness.

2.2 Grant Awards and Spending Requirements

The amount of ESG allocation received from the U.S. Department of Housing and Urban Development (HUD) varies each year and is awarded to the State via an annual Award Notice. Annually DHS notifies each Continuum of Care (CoC) Representative of the award amount for their region based on a formula utilizing local population and other poverty statistics.

The CoC Representative will distribute an annual "Provider Funding Packet" to potential subrecipients in the CoC's jurisdiction. Each subrecipient must complete and return the Provider Funding Packet, along with the required documentation, to the CoC Representative for review/approval. DHS ESG Management has the right to deny funding considerations if all appropriate documentation is not submitted or not submitted in a timely fashion. The CoC Representative submits to DHS a list of recommended subrecipients and their budgets for the total of the award in the CoC's jurisdiction.

In addition to the "Provider Funding Packet", recommended subrecipients must complete the DHS GATA contracting process, e.g., registration, pre-qualifications, Uniform GATA application, Internal Control Questionnaire (ICQ), Programmatic Risk Assessment (PRA), Indirect Cost Rate, CSA budgets, DHS Agreement (signed signature page), etc. Instructions and training for DHS GATA contracting process will be provided each year.

DHS reviews the Provider Funding Packets and all GATA required documentation to make final awards decisions and final funding amounts. Contracts are between the subrecipients and DHS. The CoC does not contract with the State, unless they are delivering services directly.

The State of Illinois - Department of Human Services (IDHS) grant period for the Emergency Solutions Grants Program is 12 months [30 ILCS 708/25 (2), (3)]; any funds not expended by the end of contract period will be rolled over into the next fiscal year at the discretion of DHS. DHS reserves the right to recapture and/or reallocate ESG funds when subrecipients do not meet the requirements under the:

  1. Contractual Agreement
  2. Policies and Procedures Manual (this document)
  3. Subsequent instruction, guidance, and Memos from DHS and HUD, and
  4. ESG regulations outlined in 24 CFR Part 576, and 30 ILCS 708/80 (Supersession) or 30 ILCS 708/997 (Sec. 1.31) (Severability)

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2.2a Grant Award & Expenditures

  1. The minimum ESG award is $25,000.00.
  2. Sub-recipients MUST EXPEND 100% of their funds and match within the grant period established by DHS.
  3. DHS and HUD will closely track subrecipient expenditures to meet requirements and allow for reallocation if sub-recipients have not spent their funds and match within the grant period.
  4. DHS reserves the right to review a subrecipient's balance of funds quarterly and re-allocate unused funds. Any ESG funds that become available to DHS because of a sanction will be made available (as soon as practicable) to other private non-profit organizations or units of general local government located in the state for use within specific time periods

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2.2b Sanctions

If DHS determines that a subrecipient is not complying with the requirements of this guide, the ESG plan or other applicable federal laws, DHS will take appropriate actions, which may include:

  1. Issuing a warning letter that further failure to comply with such requirements will result in a more serious sanction;
  2. Directing the subrecipient to cease incurring costs with ESG funds
  3. Requiring that some or all ESG funds amounts be remitted to DHS
  4. Reducing (de-obligating) the level of funds the sub-recipient would otherwise be entitled to receive; or
  5. Electing to make the subrecipient ineligible for future DHS funding.

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2.3 Eligible Subrecipients

The following entities are eligible to submit an application for funding under ESG:

  1. Units of Local Government
  2. Private Non-Profit Organizations
  3. Faith-Based Non-Profit Organizations (cannot be funded for inherently religious activities, cannot proselytize, or discriminate based on participant's faith)

Note: The definition of an "Emergency Shelter" is not restricted to those facilities that provide overnight sleeping accommodations. As a result, day centers and drop-in centers are also eligible to receive ESG funds for eligible activities.

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2.4 Initial Budget and Modifications to Budget/Match

The CoC Representative will forward the recommended budget amounts to their respective subrecipient and to DHS ESG Manager. With the subrecipient GATA application submission to DHS ESG, the subrecipient must submit their CoC approved Budget Request form. At any time that this budget needs to be modified, a Modification Request form must be approved by the CoC Representative and then submitted to DHS ESG Manager for approval and processing. DHS ESG strongly encourages limited modifications to budgets and time must be allotted to process. DHS reserves the right to approve or deny Modification Requests.

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2.5 Match Requirements & Eligible Types of Matching Contributions

An award of ESG funding requires a match with an equal amount of cash or in-kind funds to supplement the ESG program. Matching contributions may be obtained from any source, including any Federal source other than the ESG program, as well as state, local and private sources. However, the following requirements apply to matching contributions from a Federal source of funds:

  1. The State and the subrecipient must ensure the laws governing any funds to be used as matching contributions do not prohibit those funds from being used to match ESG funds.
  2. If ESG funds are used to satisfy the matching requirements of another Federal program then funding from that program may not be used to satisfy the matching requirements under this section.
  3. The matching contributions must meet all requirements that apply to the ESG program.
  4. Matching funds must be identified during the annual DHS contracting process via budgetary information.
  5. In order to count towards the required match for the State's fiscal year grant, cash contributions must be expended within the grant deadline.
  6. Noncash contributions must be made within the same period.
  7. Contributions used to match a previous ESG grant may not be used to match a subsequent ESG grant.
  8. Contributions that have been or will be counted as satisfying a matching requirement of another Federal grant or award may not count as satisfying the matching requirement of the ESG allocation.

Eligible types of matching contributions may be met by one or both of the following:

  1. Cash contributions: Cash expended for allowable costs under the ESG program, may be considered.
  2. Non-cash contributions: The value of any real property, equipment, goods, or services contributed to the subrecipient's ESG program, provided that if the subrecipient had to pay for them with grant funds, the costs would have been allowable. Noncash contributions may also include the purchase value of any donated building.
    1. Calculating the amount of noncash contributions: (See below for specific instructions for units of local governments and non-profit subrecipients)
      • To determine the value of any donated material or building, or of any lease, the subrecipient must use a method reasonably calculated to establish the fair market value.
      • Services provided by individuals must be valued at $10 dollars per hour, except when volunteers perform duties that are professional in nature. In that case, the rate is the hourly rate that the person charges as a professional. For example: if an attorney volunteers his/her time to provide pro bono legal services to the subrecipient and his/her billable rate is $150/hour then the subrecipient may claim $150/hour for that volunteer.
    2. Some noncash contributions are real property, equipment, goods, or services that, if the subrecipient had to pay for them with grant funds, the payments would have been indirect costs. Matching credit for these contributions must be given only if the subrecipient has established, along with its regular indirect cost rate, a special rate for allocating to individual projects or programs the value of those contributions.
  3. Costs paid by program income: Costs paid by program income shall count toward meeting the State and/or subrecipient's matching requirements, provided the costs are eligible ESG costs that supplement the subrecipient's current ESG program.

Instructions for Units of General Local Government:

In calculating the amount of matching funds, the time contributed by volunteers shall be determined at the rate consistent with those ordinarily paid for similar work in the subrecipient's organization. If the subrecipient does not have employees performing similar work, the rates will be consistent with those ordinarily paid by other employers for similar work in the same labor market. In either case, a reasonable amount for fringe benefits may be included in the valuation. The Grantee must maintain evidence of how the rate determination was calculated and be available for review upon request by DHS. The grantee will determine the value of any donated material or building, or of any lease, using a method reasonably calculated to establish a fair market value. For additional information, refer to 24 CFR 85.24.

Instructions for Non-Profit Subrecipients:

Volunteer services furnished by professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as matching if the service is an integral and necessary part of an approved project or program. Rates for volunteer services shall be consistent with those paid for similar work in the subrecipient's organization. In those instances, in which the required skills are not found in the subrecipient's organization, rates shall be consistent with those paid for similar work in the labor market in which the recipient competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, allowable, and allocable may be included in the valuation.

Maintenance of Effort Requirement:

If a subrecipient is a unit of general local government, ESG funds cannot be used to replace funds the local government provided for street outreach and emergency shelter service during the immediately preceding 12-month period unless HUD determines that the unit of general local government is in a severe financial deficit.

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