7 AAC 78.160. Costs

(a) This section applies to a grantee's use of grant money.

(b) A grantee may use grant money to pay a cost incurred by the grantee only

(1) in accordance with the limitations established in this section; and

(2) if the cost is reflected in the budget, or budget amendment involving a change in the grant amount approved by the commissioner, for the grant project.

(1) telephone, postage, telegram, and other communication costs;

(2) the cost of insurance, including

(A) insurance for employee health; and

(B) hazard, malpractice, and other liability insurance coverage for personnel, vehicles, and activities of the grant project;

(3) registration fees for symposiums and seminars;

(4) stipends for individuals used as subjects in research projects;

(5) dues for the grantee's membership in professional organizations;

(6) tuition and related costs for providing employee training in support of the grant project, if the grantee obtains pre-approval of the grantee's written training plan from the department;

(7) the cost of providing training services for persons other than employees;

(8) bonding costs;

(9) equipment purchase costs, subject to 7 AAC 78.270 and 7 AAC 78.280;

(10) equipment maintenance and repair costs;

(11) the cost of transporting equipment;

(12) the cost of supplies;

(13) the cost of toys, games, and equipment acquired

(A) to provide educational and therapy services so that parents can participate in the services of the grant project;

(B) for diagnostic or therapeutic purposes in specialty or diagnostic clinics and similar programs; or

(14) the cost of an audit if the scope of the audit is defined in accordance with applicable federal or state statutes or regulations.

(d) A grantee may use grant money to pay the following costs for capital grants:

(1) general construction;

(2) allowable administrative expenses, as provided in the grant agreement, and subject to (r) of this section;

(3) major fixed and movable equipment, if a security agreement that protects the state's interest in the asset, approved by the facilities manager, has been executed by the grantee;

(4) architect and engineering fees;

(5) consultation fees;

(6) building permits;

(7) project management fees;

(8) project contingency costs;

(9) insurance;

(10) real property acquisition;

(11) other costs that are allowed by language of the capital appropriation under which the grant is made.

(e) A grantee may use grant money to pay for relocation costs if the relocation is for the benefit of the grant project, and if the relocation costs are incidental to a change of duty assignment of an employee for an indefinite period, or for a definite period of not less than 12 months, or to the recruitment of a new employee. The relocation costs paid by a grantee under this subsection may include only transportation of the employee and of the employee's family, dependent's and household goods to the new location. Before paying a cost under this subsection, the grantee must establish written policies that

(1) state the circumstances under which the grantee will pay for relocation costs;

(2) state the maximum amount the grantee will pay; and

(3) require the employee to reimburse the grantee, pro-rata based on the number of months remaining at the time the employee terminates employment, for the relocation costs if the employee resigns for reasons within the employee's control less than 12 months after the relocation; the grantee shall refund to the department any money reimbursed under this paragraph unless the department approves reallocation of that money.

(f) Repealed 6/24/2004.

(g) A grantee may, subject to prior department approval, use grant money to pay for fees, transportation expenses, and per diem or subsistence expenses of a consultant. However, a grantee may not use grant money to pay these costs to an employee of the grantee if doing so will result in double compensation to the employee or to the grantee for services or hours provided by the employee. To receive department approval for a proposed payment under this subsection, the grantee must show to the department that

(1) the consultant's services are essential to the grant project and cannot be provided by a person whose salary is paid, in whole or in part, with grant money;

(2) the grantee will establish and use a selection process to secure a qualified consultant;

(3) the selection of the consultant is subject to approval by a senior officer of the grantee; and

(4) the grantee will assure that the consultant's fees are appropriate, considering the qualifications of the consultant, the consultant's normal fees, and the nature of the services rendered by the consultant.

(h) Subject to (i) of this section, a grantee may use grant money to pay for travel expenses as follows:

(1) for air travel, the expenses may not include first-class seating or travel on a carrier other than a United States carrier unless no other form of air travel is available; and

(2) payment for travel expenses may not exceed the greatest of

(A) the basic reimbursement for travel expenses and the basic per diem and meal allowances allowed under AS 39.20.110 - 39.20.190;

(B) the actual costs, not including gratuities, of moderately-priced accommodations and meals; or

(C) for a project that includes money under a federal grant to the grantee or federal contract with the grantee, the travel costs allowable under the federal grant.

(i) If the grantee has a written travel policy that is more restrictive than the limitations set out in (h) of this section, the grantee may use grant money to pay no more for the travel expenses under (h) of this section than the amount that is allowed under the grantee's policy.

(j) A grantee may use grant money to pay tax expenses. However, these expenses may not include taxes from which the grantee is exempt.

(k) Depreciation on buildings, renovations, and nonexpendable personal property not purchased with state money is allowable under this section, using the straight-line method to calculate depreciation. The useful life of assets must be determined by using the most recent applicable Internal Revenue Service table. The grantee must maintain any payment received under this section in a separate reserve account designed for the replacement of the asset when fully depreciated, or for the purchase of other assets in support of the grant project that have been approved by the department.

( l ) A grantee may use grant money to pay the following costs in support of the grant project only after receiving department approval for the cost:

(1) the cost of advertising and public-awareness activities;

(2) drug costs;

(3) the cost of legal services;

(4) the cost of routine and ancillary medical services on either an inpatient or outpatient basis for a recipient of services or an employee;

(5) salaries, wages, overtime, and fringe benefits paid to employees of the grant project, subject to (m) and (n) of this section;

(6) the cost of rental or true lease of facilities and equipment, subject to (o) of this section;

(7) the cost of altering or renovating a building if

(A) the grantee is not an individual;

(B) the building has a usable life consistent with the objectives of the grant project, is architecturally suitable for conversion, and conforms with federal statutes and regulations governing access by individuals with disabilities;

(D) the grantee secures a lease for the building for the grant period if the grantee does not own the building;

(E) the grantee has executed a security agreement that the facilities manager has approved, and that protects the state's interest in any asset purchased with grant money as part of the building alteration or renovation; and

(F) the cost is approved by the facilities manager;

(8) the cost of the acquisition of a building, including principal and interest costs, if

(A) the grantee is not an individual;

(B) the building has a usable life consistent with the objectives of the grant project, is architecturally suitable, and conforms with federal statutes and regulations governing access by individuals with disabilities;

(D) the grantee provides a long-term plan demonstrating to the department's satisfaction that the acquisition is economically feasible and that the building is, or will be, architecturally sound;

(E) the grantee has executed a security agreement that protects the state's interest in the asset, and that the facilities manager has approved; and

(F) the cost is approved by the facilities manager.

(m) If an employee of a grantee performs for the grantee both duties that are under the grant project and duties that are not under the grant project, the grantee shall determine the amount of a payment under ( l )(5) of this section on the basis of the amount of time spent by the employee in performing the grant project duties. If the employee concurrently performs the same duty for two or more grant projects or for one grant project for which the grantee receives money under two or more grants, the grantee may allocate payments under ( l )(5) of this section among the grants or grant projects in a manner that the grantee considers appropriate. However, the allocation may not result in payments that exceed the amount owed to the employee.

(n) As part of a payment under ( l )(5) of this section, the grantee may include payment for leave taken by an employee in accordance with the written employee leave policy established by the grantee under 7 AAC 78.170.

( o ) The total amount of true lease or rental payments made by a grantee under ( l )(6) of this section may not exceed the maximum amount allowed by the department for lease or rental agreements entered into by the department. Upon request, the department will provide a copy of the applicable cost principles to an applicant for a grant or a grantee. Before a grantee renews a true lease or rental agreement for which the grantee has made payments under ( l )(6) of this section, the grantee must receive department approval.

(p) Except for capital grant projects, a grantee may use grant money to pay indirect costs of the grant project in accordance with an indirect cost rate agreed upon by the federal government and the grantee. In computing the amount of indirect cost to the grantee, the commissioner will accept the indirect cost rate in effect between the grant applicant and the federal government at the time of the grant award. An amount allocated for indirect costs of a grant project is considered part of the grant award and not an addition to it. An increase or decrease in the indirect cost rate made after the grant award does not affect the amount of the grant award. A grant applicant desiring approval in a grant agreement of payment of indirect costs in accordance with this subsection must include in the grant proposal, or have on file with the department, a copy of the most recent federally-approved indirect cost rate and other relevant documentation as the department directs. If a grantee enters into a subcontract with an agency that also has a federally-approved indirect cost rate, the total indirect cost that may be paid under this subsection may not exceed the amount allowed in the grantee's indirect cost rate. It is the responsibility of the grantee and subcontractor to negotiate an equitable allocation of indirect costs. A grantee shall make available to the state and to any appropriate municipal government, upon request, all federal audit data relating to indirect costs for the grant project paid by the federal government.

(q) Except for capital grant projects, an applicant that does not have a federally approved indirect cost rate may include administrative costs in the applicant's proposed budget as direct costs. The applicant shall document the proposed costs in the applicant's justification narrative for the proposed budget.

(r) The department will specify the amount of administrative and general costs the grantee may charge a capital grant project in the request for proposal, request for letters of interest, or other method of solicitation, and in the grant agreement.

(s) A grantee may use grant money to pay for costs in support of the grant project, other than those costs described in this section, only after receiving department approval.

(t) A grantee may not use grant money to pay for lobbying or fund raising activities.

History: Eff. 4/11/81, Register 78; am 6/23/85, Register 94; am 7/21/2002, Register 163; am 6/24/2004, Register 170

Authority: AS 18.05.040

Editor's note: The travel expense, per diem, and meal allowance information, referred to in 7 AAC 78.160(h) , may be obtained by writing to the Grants Administrator, Department of Health and Social Services, P.O. Box 110650, Juneau, Alaska 99811-0650.

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