Using Multiple Retention Schedules: Local Governments and DHHS

Retention Note: Records supporting the expenditure of federal funds passed through the Department of Health and Human Services may be destroyed on a fiscal year basis when written permission has been received from the DHHS Office of the Controller.

Have you encountered language like this in your local records retention schedule?

County Health Departments, County Social Service Departments, County Health and Human Services Departments, Local Management Entities, and Local Management Entity Providers all work with federal funds distributed by North Carolina’s Department of Health and Human Services (NC DHHS).  Records supporting the expenditure of these funds have additional retention requirements that necessitate the use of an additional retention schedule published by NC DHHS’s Office of the Controller.

Why do these agencies have additional retention requirements?

The additional retention schedule requirement stems from an extremely important principle in records management, risk management, and accounting: the fiscal and legal hold.  Records supporting a function that is currently undergoing an audit, litigation, or other official action must be retained until the official action has been resolved, even if the retention schedule would normally authorize their destruction.  Many agencies accomplish fiscal and legal holds by having an auditor or attorney inform agency staff when a hold is in place, and which records are affected.  When the official action is resolved, that same person informs agency staff that the hold has been lifted, and regular retention rules apply.  However, every records custodian should be aware of the potential for audits or litigation, and make sure that none of their records are involved in any kind of official action before destroying them.

Because NC DHHS audits statewide use of federal grant funds, all records associated with a federal funding source are automatically on a fiscal hold until DHHS has completed the audit.  Funding sources can also be subject to litigation, resulting in additional legal holds.  Since there is such a large number of funding sources that support local health, social services, and mental health programs, though, this is a much more complex process than a local attorney informing staff that a legal hold has ended.

DHHS’s solution to the myriad number of funding sources and audits is to publish its own retention schedule for grant-funded sources.  Because new audits are being completed on an ongoing basis, DHHS’s Office of the Controller publishes a new schedule about twice a year, updating local agencies on which records can be destroyed because the funding source they document has completed its audit.

How do I find NC DHHS’s Retention Schedule for Grants?

As of today’s posting, 10/26/2015, the grants retention schedule can be found on the following link to DHHS’s Office of the Controller’s website:  It contains links to the Office of the Controller’s memorandum, background information, and spreadsheet of grant sources.  Together, these documents constitute the written permission alluded to in our records retention schedules.

Please note that since these documents update on a regular basis, records custodians should not bookmark links to them.  They will be obsolete or broken within a year.  Instead, bookmark the Office of the Controller’s main page, or the link to the records retention page.

How do I know when to use NC DHHS’s Retention Schedule for Grants and when to use DNCR’s Retention Schedule?

Records custodians should always start by identifying their records on the DNCR schedules published by the State Archives of North Carolina (found here).  These schedules categorize records by the function they serve in local agencies, not by their funding source.  This means that records supporting federally-funded programs, records supporting other programs, and records supporting general office functions can all be found in the retention schedules.  The DNCR retention schedules will also note when a group of records is likely to fall under DHHS’s Retention Schedule for Grants.

Once the records have been located on the DNCR schedule, custodians should ask the following question: “Is this program supported by Federal funds passed through NC DHHS?”  If the answer is yes, the custodian will need to use DHHS’s retention schedule in addition to DNCR’s.  If the answer is no, the custodian can use the disposition instructions as published in the DNCR schedule.

What do I do if NC DHHS’s Retention Schedule for Grants and DNCR’s Retention Schedule have two different retention periods for the same records?

Use the longest retention period for the records in question, whether published by DHHS or DNCR.