Capital Outlay Guidelines

Revised March 2007 and Subject to Change

A. Introduction

Under the administration of Secretary Benny Shendo, Jr., the New Mexico Indian Affairs Department, hereinafter called the IAD; has established a Capital Outlay Unit, whose goal is to efficiently process and administer capital project appropriations on behalf of tribal communities throughout New Mexico. To accomplish this goal, procedures to facilitate accurate and timely processing and reporting have been developed. Performance Measures have been established by IAD and all Joint Powers Agreements between the State of New Mexico and Tribal entities/organizations must contain performance measures with which to measure the success of the capital project.

Upon the conclusion of the legislative session, the Governor of New Mexico has 20 days to either approve or line item veto capital outlay projects. The IAD will immediately notify the tribal entity/organization of the capital outlay projects appropriated to their community through an award letter for both Severance Tax Bond and General Fund appropriations. IAD will request that a scope of work (SOW) be submitted to IAD if the project is "project ready."; A SOW must be submitted for each appropriated project(s).

B. Funding Types

Severance Tax Bonds– These bonds are issued by the State of New Mexico and are paid back from taxes collected from the gas, oil and mining industries.

The NM State Board of Finance (SBOF) will inform IAD that it is preparing to issue severance tax bonds to fund projects authorized by the New Mexico State Legislature. IAD is authorized to certify the need for severance tax bond proceeds: (1) appropriated or re-appropriated in legislation, or (2) appropriated, but not yet certified in prior legislative sessions.

IAD distributes questionnaires to each tribal entity/organization appropriated Severance Tax Bond funding. The notice from SBOF will set forth the issue date of the bond and deadline for questionnaires. The questionnaire will state the name of the project and give a project description. It is designed to certify: (1) ownership, operation and use of project; (2) other funding sources (available to the project); (3) project readiness and spend-down of bond proceeds; and (4) contingencies. The signature of an authorized officer is required on the questionnaire. After a determination has been made on the projects to be included in the sale, a certification form will be presented to IAD for signature.

NOTE: IAD urges tribal entities to thoroughly assess project readiness. If the project is not ready to begin, it is critical that the questionnaire provide that information to IAD and SBOF. The Bonds are subject to arbitrage (interest charged to the bond). The longer it takes for the tribal entity/organization to spend the money, the more interest the State must pay on the bond. This is money that could be better spent by tribes to fund more projects.

General Funds – The State of New Mexico's surplus money. The New Mexico State Legislature appropriates funds to the IAD for specific capital projects at tribal communities and tribal organizations throughout the state.

C. Guidelines and Policies Governing Disbursements

The IAD Capital Outlay Unit must safeguard State assets through the effective management and administration of capital projects allocated to IAD. This will be accomplished by: recognizing and recording all transactions; assuring that resources are expended only for authorized purposes; complying with legislation, rules and regulations; establishing accountability; and by ensuring that all processes are completed timely, accurately completely, economically, efficiently, and effectively.

To safeguard assets, monies must be disbursed using only the methods and procedures authorized by State law, rules and regulations. The following guidelines are meant as guidelines. However, deviation from these procedures would be considered by NM Department of Finance and Administration (DFA) as poor accounting practices (see section 12-6-5, NMSA 1978 which requires poor accounting practices to be reported in an agency's audit report).

All disbursements of State monies through the IAD shall be made through the use of one of the following:

1. Payment Vouchers/Warrants – These documents are used for the majority of monies disbursements on a reimbursement basis only.
   
   
2. Wire Transfer Payment to Tribal Entity/Organization – The IAD will submit to the State Board of Finance a drawdown request with wire instructions forms, on a reimbursement basis only.
   
   
3. Advance Payment - Available for the purchase of equipment and vehicles only.
   
   

D. Scope of Work (SOW)

IAD has standardized the requirements for the SOW, which must be submitted to begin drafting the Joint Powers Agreement (JPA). The following information must be included on all SOW. (Samples attached for vehicle purchase, bathroom addition, power lines, building construction.)

1. Name of Tribal Entity/Organization
   
   
2. Project Title
   
   
3. Severance Tax Bond Appropriation/General Fund Appropriation
   
   
4. JPA Number/Project Number
   
   
5. Background Narrative (about the project)
   
   
6. Work Plan
   
   
7. Budget (Total budget must equal the amount appropriated by the legislature for the capital project.)
   
   
8. Art in Public Places (If the appropriation is for new construction or major renovation exceeding $100,000, 1% must be set aside for the acquisition of art.)
   
   
9. Performance Measures
   
   
10. Results Expected (Benefits to the Community)
    
    
11. Time Frame/Milestones
    
    
12. Responsible Staff

The SOW must be forwarded to IAD Capital Outlay Unit, where it will be reviewed, prioritized and processed. The Capital Outlay Unit Staff and General Counsel will review the SOW to assure that it is within the legislative intent of the appropriation. Upon its approval, the SOW is incorporated into the JPA. The JPA is forwarded to the tribal entity/organization for signature by the tribal/organizational leader. Upon signing, the JPA is sent back to IAD, where it is forwarded to New Mexico Taxation and Revenue Department for review and signature. Purchase documents are prepared by IAD and then forwarded to New Mexico Department of Finance and Administration for final approval by the Cabinet Secretary for DFA. Please note this process takes approximately 60 to 90 days.

1. Art in Public Places Program

In 1986, the Legislature of the State of New Mexico passed and the Governor signed into law the Art in Public Places Act (§13-4A-1, NMSA 1978, as amended). The legislation declares it to be "a policy of the State that a portion of appropriations for capital expenditures be set aside for the acquisition or commissioning of works of art to be used in, upon, or around public buildings." (§13-4A-2, NMSA 1978). The resulting AIPP is often referred to as the One Percent for Art Program because of the requirement in the law. The primary provision in the AIPP Act is that "all agencies shall allocate. . . one percent or $200,000, whichever is less, of the amount of money appropriated for new construction or a major renovation exceeding $100,000 to be expended for the acquisition of . . . art (§13-4A-4)." For questions about AIPP, please contact staff at:aipp@oca.state.nm, in Santa Fe 827-6490 or in-state 800-879-4378.

2. Navajo Nation Additional Process for Contract Approval

All steps are the same up to the SOW approval. The OMB budget forms are required for the Navajo Nation to approve the JPA. The forms for FY-2006 are Forms 1 and 4, if project requires the use of Personnel, please include Form 6. These forms can be found on the OMB and CIO websites. The JPA is then forwarded back to Capital Improvement Office (CIO) who gets the respective Council Delegate to sponsor the JPA before the Transportation Community Development Committee (TCDC) and the Inter -Governmental Relations Committee (IGR). Upon approval and receipt of the resolution from IGR, CIO will attach the resolution to the three (3) original JPAs and send it to the Office of the President for signature. After the President signs all three original JPAs, they must be returned to CIO who then forwards the original documents back to IAD.

E. Request for Payment and Reporting Requirements

1. Severance Tax Bond and General Fund Appropriations

In an effort to standardize the process for Requests for Payment for capital outlay projects, special projects, and other special appropriations, please follow these guidelines when preparing your documentation for submittal to the IAD.

• Requests for Payment must include an itemized invoice, in date sequence, for materials received and work performed. The invoice must have been accepted and paid for by the tribe/organization to the billing party.
  
  
• Requests for Payment must reference the JPA# (located at the top right corner of your Joint Powers Agreement).
  
  
• Source documents must accompany the Invoice, including a copy of the invoice from the vendor and a copy of the cancelled check made payable to the billing party (a copy of both sides of the check is required). If you are unable to provide a copy of the bank endorsement on the back side of the check, then a copy of the bank statement will suffice. Please highlight the check number and the amount of the check. If the statement is not available at the time you invoice IAD, please include the statement with your next quarterly report.
  
  
• The Certification section of the Request for Payment must contain the name of the staff person (i.e. accountant, project manager, program director, etc.) completing the report. Please include the title and direct telephone number in case there are questions or problems with the Request for Payment. An authorized certifying official (i.e. Chief Financial Officer, Controller, tribal leader, etc.) must sign and approved the Request for Payment to certify that the document is complete and correct.
  
  
• In accordance with the Joint Powers Agreement Section 3.B., "Payment shall be made upon receipt of a detailed, certified, invoice from the TRIBAL ENTITY/ORGANIZATION, accompanied by a Quarterly Report, on the form provided by IAD that contains a statement of account, budget activity report, and a narrative progress report of activities." Therefore, all invoices must include the Request for Payment/Quarterly Report form. This form will provide an update to IAD on the project's status; reference the performance measures and a narrative report on the project's accomplishments and progress during the reporting period. Accomplishment examples include, but are not limited to, completed construction phases and deliverables such as architectural and engineering drawings, purchased equipment and vehicles, etc.
  
  
• Requests for Payment for projects funded with Severance Tax Bond proceeds are processed in accordance with the State Board of Finance deadlines which are the 10th and 20th of each month. All tribal entities organizations must have an authorized (and up-to-date) agreement for wire transfer services. It is critical that IAD be kept informed if an entity changes its financial institution. Once the funds have been transferred to the tribal entity/organization, written notification is sent to verify the wire transfer.
  
  
• Requests for Payment for projects funded with General Fund proceeds can be processed within 7 days from the time it is received.
  
  
• The tribal entity/organization will provide for strict accountability of all receipts, disbursements and Statement of Account/Budget Activity Report/Narrative Quarterly Progress Report of Activities. The tribal entity/organization will preserve such records for at least three (3) years following the final expenditure under the Joint Powers Agreement.

2. Advance Pay Procedures

As the coordinating agency for intergovernmental and interagency programs concerning tribal governments and the state, IAD has established the following Guidelines with regard to advance pay to vendors. PLEASE NOTE: The definition of the word "vendor" means the tribal entity receiving the capital outlay appropriation.

A. Background: The Joint Powers Agreement (JPA) stipulates for all capital outlay projects that disbursements for costs incurred under the JPA shall be approved on a cost reimbursement basis. Many tribal communities do not have the cash flow or financial resources available to pay project expenses and then get reimbursed by the State of New Mexico at a later date. The need for the advance pay is in demand and IAD contends that the back log of capital outlay projects would be reduced if an advance pay process is utilized.

B. Advance Pay Limitations: IAD may utilize the advance pay process for the purchase of vehicles and equipment only. To qualify for the advance pay, the tribal entity must meet the following criteria:

• Standard accounting policies and procedures must be established and the tribal entity must conduct annual financial audits, certified by an accredited financial auditing firm.
  
  
• Procurement Procedures
  
  
• Filing Procedures
  
  
• Personnel Procedures
  
  
• Property Management Procedures

A tribal entity who wishes to participate in the advance pay process, must submit a letter of application to the IAD Cabinet Secretary, certified by the tribal/chapter official, assuring that the abovementioned criteria has been met. IAD staff will request that the above stated documentation be produced for verification during monitoring and compliance of the project and/or upon site visits to the tribal entity.

The tribal entity must then submit a scope of work and IAD will draft the Joint Powers Agreement with authorizing language for advance pay and other applicable language necessary for the State to conduct business with the tribal entity's vendor(s).

• The JPA shall include provision requiring certification that the tribe assures compliance with the tribe's procurement code.
  
  
• The JPA shall stipulate that the asset(s) will be made part of the tribal financial records.
  
  
• The JPA shall include provisions requiring the tribe to report the 1099 information to the Internal Revenue Service.
  
  
• The tribe shall provide documentation verifying the issuance of such 1099(s).
  
  
• The tribe will grant permission to allow IAD to monitor the vendor on tribal lands.

Note: The selected vendor must submit a completed DFA approved W-9 form to be placed in the State's vendor file. Payment to the vendor shall be processed according to the provisions set forth in the JPA.

C. Advance Pay Reporting Requirements

Project monitoring and compliance will be conducted by the IAD or its other authorized representatives from the designated State of New Mexico agencies.

F. Project Close-Out

All Capital Outlay Projects are required to be formally closed-out by IAD and the tribal entity/organization. The close-out report must include a narrative description of the project's accomplishments and final project disposition. A discussion on the project's benefit to the community served and any problems encountered must be presented in the close-out report.