Maximum grant award. A grant award shall not exceed 70 percent of the budgeted allowable costs of operation and administration of the certified State mediation program. In no case will the sum granted to a State exceed $500,000 per fiscal year.

Funding criteria. FSA will consider the following in determining the grant award to a qualifying State:

Demand for and use of mediation services (historical and projected);

Scope of mediation services;

Service record of the State program, as evidenced by:

Number of inquiries;

Number of requests for and use of mediation services, historical and projected, as applicable;

Number of mediations resulting in signed mediation agreements;

Timeliness of mediation services; and

Activities promoting awareness and use of mediation;

Historic use of program funds (budgeted versus actual); and

Material changes in the State program.

Disbursements of grant funds. (1) Grant funds will be paid in advance, in installments throughout the Federal fiscal year as requested by a certified State mediation program and approved by FSA. The initial payment to a program in a qualifying State eligible for grant funding as of the beginning of a fiscal year shall represent at least one-fourth of the State's annual grant award. The initial payment will be made as soon as practicable after certification, or re-certification, after grant funds are appropriated and available.

Payment of grant funds will be by electronic funds transfer to the designated account of each certified State mediation program, as approved by FSA.

Administrative reserve fund. After funds are appropriated, FSA will set aside 5 percent of the annual appropriation for use as an administrative reserve.

Subject to paragraph (a) of this section and the availability of funds, the Administrator will allocate and disburse sums from the administrative reserve in the following priority order:

Disbursements to cover additional, unbudgeted demands for mediation services in qualifying States eligible for grant funding as of the beginning of the fiscal year;

Grants to qualifying States whose requests for new certification or re-certification were received between August 2 and March 1. A previously qualifying State that submits a request for re-certification received after August 1 may receive a grant award effective as of the beginning of the fiscal year. A newly qualifying State that submits a request for certification received after August 1 may receive a grant award effective March 31 of the fiscal year.

Any balance remaining in the administrative reserve will be allocated pro rata to certified State mediation programs based on their initial fiscal year grant awards.

All funds from the administrative reserve will be made available on or before March 31 of the fiscal year.

Period of availability of funds. (1) Certified State mediation programs receiving grant funds are encouraged to obligate award funds within the Federal fiscal year of the award. A State may, however, carry forward any funds disbursed to its certified State mediation program that remain unobligated at the end of the fiscal year of award for use in the next fiscal year for costs resulting from obligations in the subsequent funding period. Any carryover balances plus any additional obligated fiscal year grant will not exceed the lesser of 70 percent of the State's budgeted allowable costs of operation and administration of the certified State mediation program for the subsequent fiscal year, or $500,000.

Grant funds not spent in accordance with this part will be subject to de-obligation and must be returned to the USDA.