Centralizing Federal Grants in North Carolina: A Study of Best Practices from U.S. Centralized Grant Fund Offices

Abstract

North Carolina’s decentralized management of federal grant funds undermines efficiency, transparency, and compliance. Each state agency manages its federal grants independently, without a central authority to coordinate efforts, ensure consistency, or provide technical assistance. This fragmented method leads to delayed fund distributions, reporting inconsistencies, and lost opportunities for federal investments. In fiscal year 2024, North Carolina received more than $35 billion in federal grants, but subsequent audits revealed notable oversight problems and capacity issues within the agencies. For instance, the North Carolina Office of the State Auditor reported an audit identifying $8.5 million in questioned costs because the DOC misallocated unemployment insurance administration funds by incorrectly charging expenditures to the wrong timeframes. The DOC did not adequately monitor $55 million designated for employment and training initiatives. The influx of emergency relief funding amid COVID-19 exacerbated these challenges, particularly ARPA, CARES, and IIJA. SLPRs and subrecipients faced difficulties with evolving compliance standards, data management, and technical workforce shortages. Without a centralized office or uniform procedures, funds were often misallocated, underused, or delayed, hindering the state’s recovery and preparedness efforts. The research conducted for this report draws on semi-structured interviews conducted with centralized grant offices in seven states: Arizona, Colorado, Indiana, Massachusetts, Ohio, Rhode Island, and Wyoming. Policy manuals, organizational charts, and public reports were reviewed to triangulate the interview and validate findings. The analysis employed a thematic approach to reveal governance structures, funding models, technical assistance strategies, and compliance mechanisms. The findings were synthesized to highlight best practices that inform the recommendations for North Carolina in establishing a CFGMD. The report outlines the following key success takeaways from secondary research and interviews, which will benefit the North Carolina OSBM in establishing CFGMD: Leadership support is essential for establishing and sustaining a centralized federal grants management system office. Positioning the CFGMD within a key agency such as the OSBM gives the office high-level support and visibility, allowing it to adopt a more holistic, cross-cutting approach across the state government. The WGMO was established with strong backing from the governor. In contrast, the Colorado Governor’s OFFSI is located within the Governor’s office instead of being an independent body or part of a specific state agency. This placement provides the office with elevated support and visibility, enabling it to implement a more comprehensive, cross-agency strategy throughout the state government. Collaboration Across SLPRs and Sub-Recipients Enhances Knowledge Sharing and Prevents Overlapping. The COVID-19 pandemic underscored the necessity for coordinated responses, indicating that cooperation between SLPRs and sub-recipients can effectively meet public needs with federal grant funds. Colorado’s OFFSI approach, which involved appointing “recovery officers” to different state agencies, is a good example of coordinated funding opportunities across the SLRP, supervising the use of funds, comprehending federal guidelines, and sharing knowledge. Capacity building and technical support help SLRPs and subrecipients effectively manage the federal grant funds. States like Ohio and Wyoming offer training sessions, office hours, and tailored assistance for local governments and nonprofits. Ohio’s Grants Partnership conducted more than 30 monthly training sessions and organized an annual summit that attracted nearly 1,000 attendees. Centralized grant management systems streamline workflows and improve transparency. Rhode Island and Indiana implemented eCivis to manage the complete grant lifecycle—from pre-award to reporting—while integrating it with financial systems like PeopleSoft. In Rhode Island, eCivis replaced outdated Excel-based tracking, enabling standardization and real-time oversight. Meanwhile, Indiana’s system offers cross-agency visibility and supports cost-benefit analysis for proposed grants. Sustainable funding and emergency preparedness are essential for maintaining continuity and resilience. Rhode Island enacted a statutory Grants Management Administration Fund, ensuring ongoing financial support for its office. In contrast, Colorado’s grant oversight office faces long-term instability due to its reliance on temporary ARPA funds. Ohio developed contingency plans and adjusted staffing during COVID-19 to meet changing requirements. To address North Carolina’s current federal grants management constraints and build a sustainable, transparent, and effective grants infrastructure, the following recommendations are proposed: • Establish the CFGMD, housed within OSBM and supported by an executive order or legislation. Define roles and governance structures, including interagency advisory representation. Lessons learned from seven states with various staffing setups indicated that inadequate staffing was a common obstacle; therefore, North Carolina’s CFGMD should concentrate on a comprehensive team structure with clearly defined responsibilities to enhance operational capability and collaborative effectiveness. • Provide technical support and capacity-building initiatives for SLPRs and sub-recipients, focusing on training, toolkits, and direct assistance. Additionally, enhance their capabilities through courses, training sessions, workshops, office hours, and webinars. • Procure and implement a centralized grant management system (e.g., eCivis) integrated with the state’s financial platforms. Ensure it supports full lifecycle tracking and public transparency. • Develop a sustainable funding model, such as a Grants Management Administration Fund, to ensure continuity and independence from volatile federal appropriations. • Prepare for emergencies by establishing contingency protocols, surge staffing plans, and a dedicated unit within the CFGMD to manage rapid-response funds.