Unobligated Balance: Key Insights into Its Legal Meaning and Importance
Definition & Meaning
The term "unobligated balance" refers to the portion of federal funds that a grantee has received but has not yet committed to specific projects or expenditures. This amount is calculated by subtracting the total obligations (the funds that have been legally committed) from the total funds authorized by the federal agency. Understanding unobligated balance is crucial for managing grant funds effectively and ensuring compliance with federal regulations.
Legal Use & context
Unobligated balance is primarily used in the context of federal grants and cooperative agreements. It plays a significant role in financial management and reporting for state and local governments. This term is relevant in various legal areas, including administrative law and public finance. Users can manage their obligations and funding more effectively using legal templates provided by US Legal Forms, which can help ensure compliance with federal requirements.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A local government receives a $1 million federal grant for infrastructure projects. If they have spent $600,000 on various projects, their unobligated balance would be $400,000.
Example 2: A nonprofit organization is awarded $500,000 for community services. If they have only obligated $200,000, their unobligated balance stands at $300,000. (hypothetical example)
Relevant laws & statutes
Pursuant to 49 CFR 18.3, the definition and management of unobligated balances are outlined in the Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments. This regulation establishes the framework for managing federal funds effectively.