627.440—Classification of costs.

(a) Allowable costs for programs under title II and title III shall be charged (allocated) to a particular cost objective/category to the extent that benefits are received by such cost objective/category. Joint and similar types of costs may be charged initially to a cost pool used for the accumulation of such costs pending distribution in due course to the ultimate benefitting cost objective/category. The classification of costs for programs under title III of the Act are set forth at § 631.13 of this chapter, Classification of costs at State and substate levels.
(b) For State-administered programs under Title II, the State is required to plan, control, and charge expenditures against the following cost objectives/categories:
(1) Titles II-A and II-C (combined)—capacity building and technical assistance ( sections 202(c)(1)(B) and 262(c)(1)(B) of the Act to carry out activities pursuant to sections 202(c)(3)(A) and 262(c)(3)(A) of the Act);
(2) Titles II-A and II-C (combined)—8 percent coordination ( sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out activities pursuant to section 123(d)(2)(A) of the Act);
(3) Titles II-A and II-C (combined)—8 percent services/direct training ( sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out activities pursuant to section 123(d)(2)(B) of the Act);
(4) Titles II-A and II-C (combined)—8 percent services/training-related and supportive services ( sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out activities pursuant to section 123(d)(2)(B) of the Act);
(5) Titles II-A and II-C (combined)—8 percent services/administration ( sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out activities pursuant to section 123(d)(2)(B) of the Act);
(6) Titles II-A and II-C (combined)—8 percent services to disadvantaged ( section 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out activities pursuant to section 123(d)(2)(C) of the Act);
(7) Title II-A—older individuals/direct training ( section 202(c)(1)(D) of the Act to carry out activities pursuant to section 204(d) of the Act);
(8) Title II-A—older individuals/training-related and supportive services ( section 202(c)(1)(D) of the Act to carry out activities pursuant to section 204(d) of the Act);
(9) Title II-A—older individuals/administration ( section 202(c)(1)(D) of the Act to carry out activities pursuant to section 204(d) of the Act); and
(10) Title II—administration ( sections 202(c)(1)(A) and 262(c)(1)(A) of the Act to carry out activities pursuant to Title II of the Act, including Title II-B).
(c) (1) SDA grant recipients and their subrecipients shall plan, control, and charge expenditures, excluding incentive funds received pursuant to sections 202(c)(1)(B) and 262(c)(1)(B) of the Act, against the following cost objectives/categories:
(i) Title II-A—direct training services;
(ii) Title II-C—direct training services;
(iii) Title II-A—training-related and supportive services;
(iv) Title II-C—training-related and supportive services;
(v) Title II-B—training and supportive services;
(vi) Title II-A—administration;
(vii) Title II-B—administration; and
(viii) Title II-C—administration.
(2) Incentive funds received pursuant to sections 202(c)(1)(B) and 262(c)(1)(B) of the Act, may be combined and accounted for in total, without regard to cost categories or cost limitations.
(d) States and subrecipients shall use the following definitions in assigning costs to the cost categories contained in paragraphs (b) and (c) of this section:
(1) Direct training services—title II-A. Costs for direct training services that may be charged to the title II-A program are:
(i) The personnel and non-personnel costs directly related to providing those services to participants specified in section 204(b)(1) of the Act and which can be specifically identified with one or more of those services. Generally, such costs are limited to:
(A) Salaries, fringe benefits, equipment, supplies, space, staff training, transportation, and other related costs of personnel directly engaged in providing training; and
(B) Salaries, fringe benefits, and related non-personnel costs of program component supervisors and/or coordinators as well as clerical staff, provided such staff work exclusively on activities or functions specified in section 204(b)(1) of the Act or allocations of such costs are made based on actual time worked or other equitable cost allocation methods;
(ii) Books, instructional materials, and other teaching aids used by or for participants;
(iii) Equipment and materials used in providing training to participants;
(iv) Classroom space and utility costs;
(v) Costs of insurance coverage of participants as specified at § 627.315(b) of this part, Benefits and Working Conditions;
(vi) Payments to vendors for goods or services procured for the use or benefit of program participants for direct training services, including:
(A) Payments for commercially available training packages purchased competitively pursuant to section 141(d)(3) of the Act;
(B) Tuition charges, entrance fees, and other usual and customary fees of an educational institution when such tuition charges, entrance fees, or other fees are not more than the educational institution's catalogue price, necessary to receive specific training, charged to the general public to receive the same training, and are for training of participants; and
(C) Payments to OJT employers, but not brokering contractors. Costs incurred under brokering arrangements shall be allocated to all of the benefitting cost categories, and
(vii) Payments to JTPA participants that represent hours spent in a direct training activity (e.g., wages, work-based training payments, training payments for combined activities), including work experience, vocational exploration, limited internships, and entry employment.
(2) Direct training services—title II-C. Costs for direct training services that may be charged to the title II-C program are the costs identified in paragraph (d)(1) of this section as well as costs directly related to providing those services to participants specified in section 264(c)(1) of the Act and which can be specifically identified with one or more of those services.
(3) Training-related and supportive services—title II-A. Costs for training-related and supportive services that may be charged to the title II-A program are:
(i) The personnel and non-personnel costs directly related to providing outreach, intake, and eligibility determination, as well as those services to participants specified in section 204(b)(2) of the Act, and which can be specifically identified with one or more of those services. Generally, such costs are limited to:
(A) Salaries, fringe benefits, equipment, supplies, space, staff training, transportation, and other related costs of personnel directly engaged in providing training-related and/or supportive services; and
(B) Salaries, fringe benefits, and related non-personnel costs of program component supervisors and/or coordinators as well as clerical staff, provided such staff work exclusively on activities or functions specified in section 204(b)(2) of the Act or allocations of such costs are made based on actual time worked or another equitable allocation method.
(ii) Needs-based payments, cash incentives and bonuses, other financial assistance and supportive services to participants and applicants, where applicable.
(4) Training-related and supportive services—title II-C. Costs for training-related and supportive services that may be charged to the title II-C program are the costs identified in paragraph (d)(3) of this section, as well as costs directly related to providing those services to participants specified in section 264(c)(2) of the Act and which can be specifically identified with one or more of those services.
(5) Administration. The costs of administration are those portions of necessary and allowable costs associated with the overall management and administration of the JTPA program and which are not directly related to the provision of services to participants or otherwise allocable to the program cost objectives/categories in paragraphs (b)(1)-(8) or (c)(1) (i)-(v) of this section. These costs can be both personnel and non-personnel and both direct and indirect. Costs of administration shall include:
(i) Except as provided in paragraph (e)(1) of this section, costs of salaries, wages, and related costs of the recipient's or subrecipient's staff or PIC staff engaged in:
(A) Overall program management, program coordination, and general administrative functions, including the salaries and related costs of the executive director, JTPA director, project director, personnel officer, fiscal officer/bookkeeper, purchasing officer, secretary, payroll/insurance/property clerk and other costs associated with carrying out administrative functions;
(B) Preparing program plans, budgets, schedules, and amendments thereto;
(C) Monitoring of programs, projects, subrecipients, and related systems and processes;
(D) Procurement activities, including the award of specific subgrants, contracts, and purchase orders;
(E) Providing State or local officials and the general public with information about the program (public relations);
(F) Developing systems and procedures, including management information systems, for assuring compliance with program requirements;
(G) Preparing reports and other documents related to the program requirements;
(H) Coordinating the resolution of audit findings;
(I) Evaluating program results against stated objectives; and
(J) Performing such administrative services as general legal services, accounting services, audit services; and managing purchasing, property, payroll, and personnel;
(ii) Costs for goods and services required for administration of the program, including such goods and services as rental or purchase of equipment, utilities, office supplies, postage, and rental and maintenance of office space;
(iii) The costs of organization-wide management functions; and
(iv) Travel costs incurred for official business in carrying out program management or administrative activities, including travel costs incurred by PIC members.
(e) Other cost classification guidance. (1) Personnel and related non-personnel costs of the recipient's or subrecipient's staff, including project directors, who perform services or activities that benefit two or more of the cost objectives/categories identified in this section may be allocated to the benefitting cost objectives/categories based on documented distributions of actual time worked or other equitable cost allocation methods.
(2) Indirect or overhead costs normally shall be charged to administration, except that specific costs charged to an overhead or indirect cost pool that can be identified directly with a JTPA cost objective/category other than administration may be charged to the JTPA cost objective/category directly benefitted. Documentation of such charges shall be maintained.
(3) Where an award to a subrecipient is for a “commercially available off-the-shelf training package,” as defined at § 626.5 of this chapter, the subrecipient may charge all costs of such package to the direct training services cost category.
(4) Profits, fees, and other revenues earned by a subrecipient that are in excess of actual costs incurred, to the extent allowable and consistent with the guidelines on allowable costs prescribed by the Governor in accordance with § 627.435(i). Cost principles and allowable costs, may be allocated to all three cost categories based on the proportionate share of actual costs incurred attributable to each category.