Human Services Cost Principles

1. Human Services CostPrinciples March 2001

2. Introduction These cost principles apply to those who have DHS contracts regardless of the type of contract.

3. How do the Cost Principles Apply? • The principles still apply regardless of the amount of the State or Federal funds received through Human Services.

4. Which Principles Apply? • Human Service Cost Principles • Applicable Federal Circulars • DHS contractors must be in compliance with both

5. Obtain a copy of Human ServicesCost Principles by: • Calling Devon Nish at (801) 538-4117 • Sending an e-mail request to dnish@hs.state.ut.us

6. What do I need to know about the cost principles? • The cost principles do not address every item that could be incurred in a federal grant. Allowability should be addressed by examining similar items of cost in the applicable circular.

7. General Cost Principles • Related Party Costs • Personal Expenses • Cost Reimbursement Contract Cost Principles 3. Administrative Costs 4. Compensation for Personal Services

8. Direct Costs (A-122) • Identified specifically with a particular final cost objective or other direct activity. • Some are not allowable but are treated as direct costs in order to share the organizations indirect costs.

9. Indirect Costs (A-122) • Cost incurred for common objectives but cannot be readily identified to final cost objective. • Costs that benefit direct costs. • Examples include depreciation, general administration expenses, cost of operating and maintaining facilities.

10. Direct Allocation Method (A-122) All costs treated as direct costs except general and administration expenses.

11. Direct Allocation Method (A-122) Joint costs are prorated as direct costs using a base most appropriate to the particular cost being prorated.

12. DHS Cost Principles limitingAdministrative Costs Administrative costs of each contract shall not exceed 25% of program costs of the contract, unless prior approval is obtained from the Executive Director of DHS.

13. Definition of administrative cost: • Personnel, payroll, purchasing, management information systems, budget and planning, risk management, legal council, accounts payable, auditing. • Includes all allocable share of office supplies, telephone expenses, etc.

14. Personal Services Human Services Cost Principles If total work time exceeds 40 hours and the contractor wants reimbursement for DHS programs (1) a perpetual time record must be maintained and (2) prior written approval must be obtained.

15. Unallowable Training Expenses • Cost of amusement, diversion, social activities, ceremonials.

16. Related Party ExpensesDHS Cost Principles The contractor shall not make payments to related parties in any category of Expenditure (Administration, Capital, or Program) without the prior written consent of the State.

17. Interest on Debt on borrowed capital or temporary use of endowment funds IS NOT ALLOWABLE except when the interest on debt is used to acquire or replace capital assets –after 9/95 (under certain conditions).

18. Other Expenditures notallowed under A - 122 • Bad Debts • Fund-raising costs • Lobbying costs • Excess of costs over income on any award • Organizational costs

19. Other Expenditures not allowed under A-122 • Advertising designed solely to promote the organization. • Costs of meetings or other events related to fund raising or other organizational activities include cost of displays, demonstrations, and exhibits.

20. Other Expenditures not allowedunder A-122 (continued) • Costs of selling and marketing any products or services of the organization.