Human Services Cost

Principles

March 2001

Introduction

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

How do the Cost Principles Apply?

The principles still apply regardless of the amount of the State or Federal funds received through Human Services.

Which Principles Apply?

Human Service Cost PrinciplesApplicable Federal CircularsDHS contractors must be in compliance with both

Obtain a copy of Human Services

Cost Principles by:

Calling Devon Nish at (801) 538-4117Sending an e-mail request to dnish@hs.state.ut.us

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.

A. General Cost Principles1. Related Party Costs2. Personal Expenses

B. Cost Reimbursement Contract Cost Principles3. Administrative Costs4. Compensation for Personal Services

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.

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.

Direct Allocation Method (A-122)

All costs treated as direct costs except general and administration expenses.

Direct Allocation Method (A-122)

Joint costs are prorated as direct costs using a base most appropriate to the particular cost being prorated.

DHS Cost Principles limiting

Administrative CostsAdministrative 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.

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.

Personal ServicesHuman Services

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.

Cost Principles

Unallowable Training Expenses

Cost of amusement, diversion, social activities, ceremonials.

Related Party Expenses

DHS Cost PrinciplesThe 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.

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).

Other Expenditures notallowed under A - 122

Bad DebtsFund-raising costsLobbying costsExcess of costs over income on any awardOrganizational costs

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.

Other Expenditures not allowed

under A-122 (continued)

Costs of selling and marketing any products or services of the organization.