DWD 805.02 History
History: Cr.
Register, July, 1986, No. 367, eff. 8-1-86.
DWD 805.03(1)
(1) A cost is allocable to a particular cost objective, such as a title, program activity or cost category, in accordance with the relative benefits received. A cost is allocable to a given grant if it is treated consistently with other costs incurred for the same purpose in like circumstances and if it:
DWD 805.03(1)(b)
(b) Benefits both the grant and other work and can be distributed in reasonable proportion to the benefits received.
DWD 805.03(1)(c)
(c) Is necessary to the overall operation of the organization, although a direct relationship to any particular cost objective cannot be shown.
DWD 805.03(2)
(2) Any cost allocable to a particular grant or other cost objective under this chapter cannot be shifted to other federal grants to overcome funding deficiencies, or to avoid restrictions imposed by law or by the terms of the grant.
DWD 805.03(3)
(3) For audit purposes, a written plan for allocation of costs shall be necessary to support the distribution of any joint costs related to the grant. All costs included in the plan shall be supported by formal accounting records which will substantiate the propriety of eventual charges.
DWD 805.03(4)
(4) The allocation plan of the grantee shall cover all joint costs as well as costs to be allocated under plans of other organizational units which are to be included in the costs of the JTPA programs. The cost allocation plans shall be presented in a single document. The allocation plan shall contain, but not necessarily be limited to, the following:
DWD 805.03(4)(a)
(a) The nature and extent of services provided and their relevance to the JTPA programs.
DWD 805.03(5)
(5) Direct costs shall be charged directly to grants. The allocation method used to distribute joint costs shall be based on a reasonable measurement of benefit received by each cost objective and shall be supported by a written cost allocation plan. A key factor in cost allocation plans is that the method used must be a determination of actual activities; budget estimates do not qualify as support for final charges. However, the effort required to distribute the cost should not be disproportionate to the dollar amount of costs charged.
DWD 805.03(6)
(6) Grantees may pool all of their JTPA administrative funds. Where this is done, the administrative cost pool must include all of the costs of administration for all JTPA programs. Only actual, not budgeted, administrative costs shall be charged to the administrative cost pool.
DWD 805.03(7)
(7) Where an administrative cost pool is used, the pool must be distributed between the various funding sources, titles, and within Title IIA, between youth and adult for reporting purposes. While the method of distribution need not meet the normal criteria for cost allocation, the method used shall be in writing and be applied consistently from period to period.
DWD 805.03 History
History: Cr.
Register, July, 1986, No. 367, eff. 8-1-86.
DWD 805.04(1)(a)(a) There is no single standard for classifying specific costs as either joint or indirect for all agencies. Because of differing organizational structures and accounting systems, some grantees may be able to treat all costs as joint, and will not need to seek an approved indirect cost rate.
DWD 805.04(1)(b)
(b) Only allowable costs shall be included in the indirect cost pool. In addition, while use of an indirect cost rate may facilitate charging overhead costs to JTPA programs. In no case, may total SDA administrative costs for Titles IIA and IIB exceed the cost limit.
DWD 805.04(2)
(2) Division grantees other than SDAS. State agencies, and other grantees with which the division may have a direct relationship, will often have indirect cost rates or methods already approved by a cognizant federal agency. Where that is the case, the division will review that rate or method and approve an indirect cost rate which may not result in charges that exceed the indirect cost rate approved by the cognizant federal agency. Where there is no indirect cost rate approved by a cognizant federal agency, the division will not review and approve an indirect cost rate; those grantees wishing to use an indirect cost rate must first turn to a federal agency in order to establish one.
DWD 805.04(3)(a)(a) Some SDAs may select grant recipients and administrative entities whose only function is to administer JTPA. In those cases, no indirect cost rate is necessary.
DWD 805.04(3)(b)
(b) Some SDAs may select agencies which have indirect cost rates already approved by a cognizant federal agency. This may occur, for example, if the administrative entity or grant recipient is a county. In those cases, the division will review the cognizant federal agency's rate and approve a rate for indirect costs for JTPA which may not exceed the federally approved rate.
DWD 805.04(3)(c)
(c) In some cases, agencies may be selected which do not have indirect cost rates, but which wish to establish a rate to facilitate charging general overhead costs to JTPA. In those cases, the division will provide technical assistance, and will review and approve the indirect cost rates. Only allowable costs shall be included in the indirect cost pool. However, the cost of auditing the indirect cost rate, which is separate from the regular audit, shall be borne by the SDA.
DWD 805.04(4)
(4) Subgrantees. Division grantees, including both SDAs and non-SDAs, shall be responsible for approving any indirect cost rates or methods they wish to accept for their subgrantees. If the division has already accepted an agency rate or method, the grantee may automatically accept that rate:
DWD 805.04 History
History: Cr.
Register, July, 1986, No. 367, eff. 8-1-86.
DWD 805.05
DWD 805.05
Standards for selected items of cost. This section provides principles to be applied in establishing the allowability of certain items of cost. These principles apply whether a cost is treated as direct, joint or indirect. Failure to mention a particular item of cost is not intended to imply that it is unallowable; rather determination as to allowability in each case should be based on the treatment or principles provided for similar or related items of cost. In certain limited circumstances, the division may give written authorization to incur costs which would otherwise be unallowable, provided that such authorization would not be a violation of the act or regulations.
DWD 805.05(1)
(1) Accounting costs. The cost of establishing and maintaining accounting and other information systems required for the management of JTPA programs is allowable. This includes costs incurred by central service agencies for those purposes.
DWD 805.05(2)(a)(a) "Advertising costs" means the costs of media services and associated costs. Media advertising includes magazines, newspapers, radio and television programs, direct mail, exhibits, and the like.
DWD 805.05(2)(b)
(b) The only advertising costs allowable are those which are solely for:
DWD 805.05(3)
(3) Audit services. The cost of audits contracted for by a grantee are allowable. However, these audits will only be accepted as substitutes for the division's audit requirements if prior approval from the division was obtained.
DWD 805.05(4)
(4) Bonding costs. Costs of premiums for fidelity bonding for individuals who are directly involved with authorizing or processing JTPA financial transactions are allowable.
DWD 805.05(5)
(5) Budgeting. Costs incurred for the development, preparation, presentation, and execution of budgets are allowable. Costs for services of a central budget office are generally not allowable since these are general agency costs. However, where employees of the central budget office actively participate in the JTPA budget process, the cost of identifiable and documented services is allowable.
DWD 805.05(6)
(6) Communication costs. Costs incurred for telephone services, local and long distance telephone calls, telegrams, radiograms, postage and the like, are allowable. That portion of costs for installation of a new communications system which is necessitated by the addition or expansion of JTPA programs is allowable.
DWD 805.05(7)(a)(a) General. Compensation for personal services includes all remuneration, paid currently or accrued, for services rendered during the period of performance under the grant agreement, including but not necessarily limited to wages, salaries, and supplementary compensation and benefits. The costs of such compensation are allowable to the extent that total compensation for individual employees:
DWD 805.05(7)(a)2.
2. Follows an appointment made in accordance with agency policy, state and local rules and laws, or other requirements, where applicable; and
DWD 805.05(7)(a)3.
3. Is determined and supported as provided in
par. (d). Compensation for employees engaged in JTPA activities will be considered reasonable to the extent that it is consistent with that paid for similar work in other activities of the agency. In cases where the kinds of employees required for the JTPA activities are not found in the other activities of the agency, compensation will be considered reasonable to the extent that it is comparable to that paid for similar work in the labor market in which the employing agency competes for the kind of employees involved.
DWD 805.05(7)(b)
(b) Fringe benefits. Costs identified under
subds. 1. and
2. are allowable to the extent that total compensation for employees is reasonable.
DWD 805.05(7)(b)1.
1. Employee benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, sick leave, court leave, military leave, and the like, if they are provided pursuant to an established leave system, and if the cost thereof is equitably allocated to all related activities, including grant programs.
DWD 805.05(7)(b)2.
2. Employee benefits in the form of employers' contribution or expenses for social security, employees' life and health insurance plans, unemployment insurance coverage, worker's compensation insurance, retirement plans for staff, severance pay, and the like, provided such benefits are granted under established plans and are distributed equitable to grant programs and to other activities.
DWD 805.05(7)(b)3.
3. No JTPA funds may be used for contributions on behalf of any JTPA program participant to retirement systems or plans.
DWD 805.05(7)(c)1.
1. If the leave system is fully funded, costs may be billed to the grant as funds are paid into the leave fund.
DWD 805.05(7)(c)2.
2. If the leave system is unfunded, costs may be billed to the grant as individuals take their paid leave. JTPA employees may not be treated differently from other employees. Agencies with unfunded systems should be aware of the unfunded liability that accumulates when staff does not take earned vacations.
DWD 805.05(7)(d)1.1. Certain conditions require special consideration and possible limitations in determining costs under JTPA where amounts or types of compensation appear unreasonable. Among such conditions are the following:
DWD 805.05(7)(d)1.a.
a. Where compensation is made to members of nonprofit organizations, trustees, directors, associates, officers, or the immediate families thereof, determination should be made that such compensation is reasonable for the actual personal services rendered.
DWD 805.05(7)(d)1.b.
b. Any change in a grantee's compensation policy resulting in a substantial increase in the grantee's level of compensation will be examined carefully, particularly when it was concurrent with an increase in the ratio of JTPA grants to other activities of the grantee, or any change in the treatment of allowability of specific types of compensation due to changes in policy.
DWD 805.05(7)(d)2.
2. Payroll and distribution of time. Amounts charged to grants for personal services shall be based on payrolls documented and provided in accordance with generally accepted practices. Payrolls shall be supported by time and attendance or equivalent records for individual employees. Salaries and wages of employees chargeable to more than one cost objective shall be supported by appropriate cost distribution records. The method used shall produce an equitable distribution of time and effort, and:
DWD 805.05(7)(d)2.a.
a. Where time distribution reports are used, these reports shall reflect an after-the fact determination of the actual activity of each employee. Budget estimates determined before the services are performed, do not qualify as support for charges to grants.
DWD 805.05(7)(d)2.b.
b. Where time distribution reports are used, these reports shall be signed by the individual employee, or by a responsible supervisory official having first hand knowledge of the activities performed by the employee, attesting that the distribution of activity represents an accurate statement of the actual work performed by the employee during the periods covered by the reports.
DWD 805.05(7)(d)2.c.
c. Regardless of the method used, each report shall account for the total activity for which employees are compensated and which is required in fulfillment of their obligations to the organization.
DWD 805.05(7)(d)2.d.
d. Salaries and wages of employees used in meeting cost sharing or matching requirements on awards shall be supported in the same manner as salaries and wages claimed for reimbursement from granting agencies.
DWD 805.05(8)
(8) Contingency provisions. Contributions to a contingency reserve or any similar provision made for events the occurrence of which cannot be foretold with certainty as to time, intensity, or with an assurance of their happening are unallowable. The term "contingency reserve" excludes self-insurance reserves, pension funds and reserves for normal severance pay.
DWD 805.05(9)
(9) Contributions. Contributions and donations of JTPA funds by the organization to other are unallowable.
DWD 805.05(10)
(10) Debts. Bad debts, including losses, whether actual or estimated, arising from uncollectible accounts and other claims, are unallowable.
DWD 805.05(11)(a)(a) Compensation for the use of buildings, other capital improvements, and equipment on hand may be made through use allowances or depreciation.
DWD 805.05(11)(b)
(b) The computation of use allowances or depreciation shall be based on the acquisition cost of the assets involved. Where actual cost records have not been maintained, a reasonable estimate of the original acquisition cost may be used in the computation. The acquisition cost of an asset donated to the organization by a third party shall be its fair market value at the time of the donation.
DWD 805.05(11)(c)
(c) The computation of use allowances or depreciation shall exclude:
DWD 805.05(11)(c)2.
2. The cost or any portion of the cost of buildings and equipment donated or otherwise borne directly or indirectly by the federal government irrespective of where title was originally vested or where it presently resides; and
DWD 805.05(11)(c)3.
3. Any portion of the cost of buildings and equipment contributed by or for the organization in satisfaction of a statutory matching requirement.
DWD 805.05(11)(d)
(d) Where the use allowance method is followed, the use allowance shall be computed in accordance with current federal guidelines.
DWD 805.05(11)(e)
(e) Where the depreciation method is followed, adequate property records shall be maintained and physical inventories shall be taken at least once every 2 years to ensure that assets exist and are usable. Any generally accepted method of computing depreciation may be used. However, the method of computing depreciation shall be consistently applied for any specific asset or class of assets for all affected programs and shall result in equitable charges considering the extent of the use of the assets for the benefit of such programs. Adequate depreciation records indicating the amount of depreciation taken each period shall also be maintained.
DWD 805.05(11)(f)
(f) When the depreciation method is used for a particular class of assets, no depreciation may be allowed on any such assets that would be viewed as fully depreciated. However, a reasonable use allowance may be negotiated for such assets if warranted after taking into consideration the amount of depreciation previously charged, the estimated useful life remaining at time of negotiation, the effect of any increased maintenance charges or decreased efficiency due to age, and any other factors pertinent to the utilization of the asset for the purpose contemplated.
DWD 805.05(12)(a)(a) Services received. Donated or volunteer services may be furnished to an organization by professional and technical personnel, consultants, and other skilled and unskilled labor. The value of these services is not reimbursable either as a direct or indirect cost.
DWD 805.05(12)(b)
(b) Goods and space. Donated goods for example, expendable personal property or supplies, and donated use of space may be furnished to an organization. The value of the goods and space is not reimbursable either as a direct or indirect cost. However, depreciation or use allowances may be charged on donated assets in keeping with the provisions in
sub. (11).
DWD 805.05(13)
(13) Employee morale, health, and welfare costs and credits. The costs of in-house publications, health or first aid clinics, infirmaries, recreational activities, employees' counseling services, and other expenses incurred in accordance with the grantee's established practice or custom for the improvement of working conditions, employer-employe relations, employee morale, and employee performance are allowable. Such costs shall be equitably apportioned to all activities of the grantee. Income generated from any of these activities shall be offset against expenses.
DWD 805.05(14)
(14) Entertainment costs. Costs of amusement, diversion, social activities, ceremonials, and costs relating thereto, such as meals, lodging, rentals, transportation, and gratuities are unallowable.
DWD 805.05(15)(a)(a) Expenditures for equipment with a unit acquisition cost of $500 or more but less than $1,000 are allowable.
DWD 805.05(15)(b)
(b) Expenditures for equipment with a unit acquisition cost of $1,000 or more are only allowable with the prior written approval of the division.
DWD 805.05(15)(c)
(c) All lease purchase agreements with a total unit acquisition cost of $1,000 or more require the prior written approval of the division.
DWD 805.05(15)(d)
(d) Capital expenditures for land or buildings are only allowable with the prior written approval of the division.
DWD 805.05(15)(e)
(e) Capital expenditures for improvements to land, buildings, or equipment which materially increase their value or useful life are only allowable with the prior written approval of the division.
DWD 805.05(15)(f)
(f) See
sub. (11) for allowability of use allowances or depreciation on buildings, capital improvements, and equipment. Also, see
sub. (37) for allowability of rental costs for land, buildings, and equipment.
DWD 805.05(16)
(16) Exhibits. Costs of exhibits relating specifically to the grant programs are allowable.
