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Section 7: Budget

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Overview

This section explains some of the considerations and requirements involved in preparing a proposal budget for Texas Traffic Safety Program grants.

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Allowability of Costs

Allowable costs are defined by the Office of Management and Budget (OMB) through established cost principles outlined in 2 CFR, Part 225 (OMB Circular A-87), Cost Principles for State, Local and Indian Tribal Governments; 2 CFR, Part 220 (OMB Circular A-21), Cost Principles for Educational Institutions; and 2 CFR, Part 230 (OMB Circular A-122), Cost Principles for Non-Profit Organizations.

The purpose of the cost principles is to provide a consistent and uniform approach to determining the allowability of costs under federal grant programs. The principles are designed to ensure the local government “bear its fair share” of the costs associated with federal awards. The principles also dictate that organizations employ sound management practices in the administration of federal awards.

To be allowable, all costs must:

  • be necessary, reasonable and allocable to the grant program;
  • comply with limitations of the grant agreement as well as other applicable federal and state laws and regulations;
  • be allocated to the grant on a basis consistent with policies that apply to all activities of the subgrantee;
  • be accounted for on a consistent basis and in accordance with generally accepted accounting principles; The State of Texas and its political subdivisions may follow the standards (statutory modified accrual basis of accounting) as defined in Texas Government Code, Title 10, Subtitle F, Chapter 2262, when other accounting bases conflict with state law.
  • not be allocated or included as a cost or used to meet cost sharing or matching requirements of any other federal award in either the current or a prior period, except where federal law or regulation permits; and
  • be adequately documented. Documentation required may include, but is not limited to, travel records, time sheets, invoices, contracts, mileage records, billing records, telephone bills and other documentation that verifies the expenditure amount and appropriateness of the grant.

The laws and regulations of the State of Texas and Texas Department of Transportation (TxDOT) policy also govern the Traffic Safety Program. The State of Texas has adopted the Common Rule (which supersedes OMB Circular A-102 of 1981) and it is included in the Texas Uniform Grant Management Standards ( Texas Government Code, Chapter 783). The Common Rule applies to federal grant recipients (such as the State of Texas) and the sub-recipients of federally assisted grants (such as municipalities receiving traffic safety grants from the State of Texas).

Policy or legislation provided by the National Highway Traffic Safety Administration (NHTSA) contains cost restrictions in addition to the OMB Circulars and state laws and regulations. For example, the Highway Safety Grant Funding Policy for NHTSA/FHWA Field-Administered Grants provides special rules regarding the use of federal NHTSA/FHWA Field-Administered Grants.

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Unallowable Costs

In addition to the unallowable costs outlined in the applicable cost principles identified above, there are some costs that must be authorized in advance or are prohibited under federal, state or local laws or regulations. These costs include, but are not limited to:

  • Advertising - Only for very special circumstances can federal funds be used to purchase television and radio time for highway safety public service messages. Such expenditures must be approved in advance.
  • Supplanting - Federal funds cannot supplant (replace) funds from any other sources. The term “supplanting,” as used in federal acts and guidelines, refers to the use of federal funds to support personnel or an activity already supported by local or state funds. Supplanting is prohibited.
  • Program Income - Program-generated income can be used as project match, as long as this is specifically approved in advance by TxDOT. See Chapter 5, Section 6 for more information.
  • Office Equipment - Federal highway safety grant funds cannot be used to purchase office furnishings.
  • Other Equipment - Equipment with a unit acquisition cost of $5,000 or greater is prohibited without prior written approval from TxDOT and NHTSA. See Chapter 5, Section 10 for more information on equipment/office furnishings.
  • Out-of-State Travel - Out-of-state travel is prohibited without prior written approval from TxDOT. See Chapter 5, Section 10 for more information on travel.
  • Alcoholic Beverages and Food - Federal traffic safety funds cannot be used to purchase alcoholic beverages or food.
  • Gratuities - Tips and/or gratuities are unallowable.
  • Lobbying - Federal and state grant funds cannot be used for lobbying activities.
  • Promotional Items Exclusively for Subgrantee Staff - T-shirts, uniforms, polo shirts, caps, etc. cannot be purchased exclusively for subgrantee staff.
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Project Budget

Each traffic safety grant must have an approved project budget which can be estimated or fixed, depending on the terms of the agreement. The proposed project budget should correspond to the grant period. Costs must be estimated as accurately as possible.

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Budget Categories

The approved project budget should be as detailed as appropriate for fiscal control of the project. Generally, the approved project budget will include only the following line items:

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Category

Accounting Code

Line Item

Labor Costs

100

Salary and Wages

 

200

Fringe Benefits

Other Direct Costs

300

Travel and Per Diem

 

400

Equipment

 

500

Supplies (postage, printing, office supplies, etc.)

600

Contractual Services

700

Other (miscellaneous) costs (specify)

Indirect or F&A Costs

800

(at specified and approved rate)



The proposed budget must be realistic and reasonable, allowable, and necessary and must include only cost-eligible line items. Potential subgrantees should include as much specific information as possible for all costs included in Fringe (200), Travel and Per Diem (300), Equipment (400), Supplies (500), Contractual Services (600), Other Miscellaneous (700), and the Indirect Cost Rate (800). Funds that will be used as matching funds by the proposing agency must also be identified.

Potential subgrantees must complete all budget pages in the eGrants project proposal that are applicable to the proposed budget. If a budget page is not applicable to a proposed project, then that page should not be completed. For example, if a proposal budget does not include indirect costs, then the Indirect Cost Form Page should not be completed and saved.

See eGrants Proposal Help in the eGrants system for assistance on entering budget items by budget category.

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General Proposal - Salaries and Fringe Benefits (100 & 200)

Potential subgrantees should identify all staff positions by title, salary and the percentage of time each position will be assigned to the project. Any person placed on this line must be an actual employee of the proposing organization, not a contractor or consultant.

Fringe benefit costs are those costs for employment of personnel other than the employee’s direct income (i.e., employer’s portion of FICA insurance, retirement, sick leave, holiday pay, vacation costs, etc.) that will be paid by the subgrantee.

See Salaries and Fringe Benefits on the eGrants Proposal Help Page for information on entering these costs into the eGrants General Salaries and Fringe Benefits Proposal Form Page.

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STEP Proposal – STEP Overtime Rate

The majority of projects involving increased enforcement of traffic laws rely on the payment of overtime hours for patrol officers. The overtime pay rate for officers is based on the actual cost per employee in accordance with the subgrantee's policy for payroll and salary rate. Therefore, law enforcement agencies submitting proposals for Selective Traffic Enforcement Program (STEP) grants should enter the total number of planned hours and an average overtime salary for officers/deputies that will work the grant.

When a project includes overtime salary or wages, traffic safety funds can pay for the additional cost of fringe benefits directly associated with the overtime hours not covered by the employee's basic benefit package (an example of an eligible fringe benefit cost associated with overtime would be an employer's contribution to a retirement plan). The costs of fringe benefits are allowable to the extent that the benefits are reasonable and are required by law, employee agreement, or an established policy. If paid by the subgrantee on overtime grants, fringe benefits can also be used as local matches. The traffic safety grant agreements allow several methods to include fringe benefits. Fringe benefits are defined as allowances and services provided by employers to their employees as compensation in addition to regular salaries and wages. For information on fringe benefits, see 2 CFR, Part 225 (OMB Circular A-87), Attachment B, 11.d., "Fringe Benefits."

NOTE: Because STEP grants rely on the payment of overtime hours for patrol officers to meet grant objectives, traffic safety grant agreements cannot pay for certain police officer training - such as Standardized Field Sobriety Testing (SFST), Drug Recognition Expert (DRE), and Radar or Laser Training - through the STEP grants.

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STEP Salary Budget Limitations

It is the intention to maximize the enforcement activity in the STEP grants by including the maximum amount of funds in (100) Salaries, A, Enforcement (overtime). With this in mind, the subgrantee must develop their budget within the following levels:

  1. The TxDOT amount of “Public Information and Education (PI&E)” activities (overtime), under (100) Salaries, B, must not exceed ten percent (10%) of the total TxDOT salaries budgeted under (100).
  2. The TxDOT amount of “Other” (i.e., overtime staff, supervisory support, conducting surveys, etc.), under (100) salaries, C, must not exceed ten percent (10%) of the grand total of the TxDOT amount budgeted.

See Salaries and Fringe Benefits on the eGrants Proposal Help Page for information on entering these costs into the eGrants STEP Salaries and Fringe Benefits Proposal Form Page.

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Travel and Per Diem (300)

Organizations with their own established travel-related expenditure rates should use their own rates in the submission of grant related reimbursement requests to the extent that they do not exceed current established state rates. All travel-related expenses must be reasonable, necessary and directly related to the grant project.

The maximum reimbursement rate amounts under Texas Traffic Safety Program grants for travel related expenditures are based on the Texas Comptroller of Public Accounts policies for state travel regulations. The most current version of the maximum reimbursement rates for travel expenditures is available at the Texas Comptroller of Public Accounts website ( http://www.cpa.state.tx.us/comptrol/texastra.html).

Potential subgrantees must identify the number of trips planned, the destination for each trip, the number of travelers, and the estimated cost of each trip. If the potential subgrantee wants to travel through the course of the grant, but the location has not been determined, this should be stated in a budget narrative.

See Travel Help in the eGrants help system for information on entering travel costs into the eGrants Proposal Travel Form Page.

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Travel and Per Diem - STEP Enforcement Mileage (300)

Non-personal vehicle usage (enforcement mileage) will be reimbursed according to the subgrantee's rate, not to exceed the state vehicle mileage rate. The subgrantee must provide documentation verifying its average cost per mile to operate patrol or fleet vehicles prior to being reimbursed for vehicle miles traveled. These evidences must be available for audit if requested by state or federal officials.

To assist STEP subgrantees in documenting the operational cost per vehicle mileage rate for enforcement vehicles, subgrantees must complete the operational cost per mile worksheet located on the enforcement mileage page of the proposal. The worksheet must include actual historical vehicle purchase cost, maintenance and fuel costs for all vehicles identified on the worksheet to adequately establish and substantiate the mileage rate. The documented rate can then be included in Texas traffic safety proposals/grants either for reimbursement (up to the current state rate per mile) or as a match (up to the documented rate per mile).

See Step Enforcement Travel in the eGrants help system for more information on travel requirements.

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Equipment (400)

Subgrantees should enter a description, quantity and unit acquisition cost of proposed equipment purchases. See Chapter 5, Section 10 for definition of equipment and subgrantee property management responsibilities under the Texas Traffic Safety Program.

NOTE: Prior approval must be obtained from TxDOT and NHTSA for any equipment with a unit acquisition cost of $5,000 or more. For information on how to request prior approval for these purchases, see Chapter 5, Section 11.

NOTE: See Equipment Help on the eGrants Proposal Help Page for information on entering these costs into the eGrants STEP Salaries and Fringe Benefits Proposal Form Page.

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Supplies (500)

Potential subgrantees must only request supplies which are necessary to fulfill the problem solution of the grant agreement.

See Supply Help in the eGrants help system for information on entering supply costs into the eGrants Proposal Supplies Form Page.

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Contractual Services (600)

Article 14, “Subcontracts,” of the Texas Traffic Safety Program Grant Agreement Terms and Conditions, states:

  • A subcontract in excess of $25,000 may not be executed by the subgrantee without prior written concurrence by TxDOT.
  • Subcontracts in excess of $25,000 shall contain all required provisions of the Grant Agreement Terms and Conditions.
  • No subcontract will relieve the subgrantee of their responsibilities under the grant agreement.

Subcontracts can be between governmental agencies as well as with non-government entities for professional services. 2 CFR, Part 225 (OMB Circular A-87), C.7., states that “costs of the grantee department are allowable subject to such prior authorization as may be required by the federal grantor agency.” The NHTSA South Central Region has delegated this authority to TxDOT based on both of the following:

  • Texas’ policies and procedures regarding the procurement of such services in the Manual of Procedures, Equipment and Procurement Division and Safety Operations Grant Agreement Routing and Review Procedures
  • the notation and listing in the Highway Safety Performance Plan (HSPP) of project or grant agreements that include professional services contracts.

NHTSA’s Funding Policy for Field-Administrated Grants states:

“Costs are allowable for highway safety consultant services from universities, public agencies, non-government organizations and individuals for state or local highway safety support services or products consistent with the applicable OMB Circular, provided applicable state procurement procedures are followed and the state’s official contract and procurement manual is maintained in the state’s highway safety office.”

See Contractual Services Help in the eGrants help system for information on entering these costs into the eGrants Proposal Form Page.

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Other Miscellaneous (700)

Other miscellaneous costs include the cost of planned production of Public Information and Education (PI&E) materials, both educational and promotional (See Chapter 5, Section 9) and any other miscellaneous costs that cannot be included in the other budget categories. Potential subgrantees must only request miscellaneous costs which are necessary to fulfill the problem solution of the grant agreement, are deemed necessary, reasonable and allocable to the grant program, and comply with applicable federal and state laws and regulations.

See Other Miscellaneous Help in the eGrants help system for information on entering proposed costs into the eGrants Proposal Form Page.

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Indirect Costs (800)

To claim indirect costs, the proposing agency must have an approved indirect cost rate and the indirect cost rate documentation must be attached. All indirect cost rates are subject to negotiation. See “ Indirect Costs (Facilities and Administrative Costs)” later in this section.

For information on entering proposed costs into the eGrants Proposal Form Page, see Indirect Costs Help in the eGrants help system.

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Reimbursement

Federal guidelines prohibit payment or reimbursement before costs have been incurred. Reimbursement may only be made for costs incurred during the grant or contract period. Federal policy also requires that all contract and grant agreements include a maximum amount eligible for reimbursement. This maximum amount is the grant reimbursable amount and is TxDOT’s share of the estimated project cost. Since highway traffic safety grants and contracts are on a cost-reimbursement basis, no capital advances are allowed, and the method of payment is a negotiated item, within federal guideline constraints.

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Method of Payment

Subgrantees may be reimbursed on the basis of actual cost, cost per unit, specific rates, fixed costs, or a combination of these. Explanations of these methods of payment follow.

Actual Cost - Actual cost agreements authorize TxDOT to reimburse the subgrantee for all costs incurred under the project, subject to cost principles included in OMB Circular A-87, Cost Principles for State and Local Governments. Traffic safety grants are limited to amounts and items authorized in the project budget. Adjustments between cost categories within the budget of up to five percent of the total reimbursable budget are allowed without requiring an amendment.

Cost Per Unit of Work - Some agreements are reimbursed on the basis of units of work performed. This method of payment uses a negotiated per-unit cost, with each component documented and approved in a detailed cost proposal. This method of payment eliminates the need to document each element included in the Request for Reimbursement (RFR), requiring instead that the performance of work be documented. However, the negotiated rate must be based on documented actual costs and experience in performing the prescribed task.

EXAMPLES:

  • $100 per person trained
  • $40 per car seat distributed

Specific Rates - Grants may authorize payment on the basis of specific rates. This method uses a composite of all or selected costs.

EXAMPLES:

  • Salary: $50 per hour
  • current state rates

Fixed Cost - The grant may authorize payment of an agreed upon fixed amount not subject to modification. Payments are made periodically at agreed upon intervals or once, upon completion of the project. If this method is used, there must be a detailed and thorough cost analysis made during the negotiating process.

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Profit Prohibited

Grants do not allow payment of any profit to the subgrantee. If the subgrantee subcontracts with a commercial (for profit) firm, the fee becomes an actual cost incurred by the subgrantee and is eligible for reimbursement if all other payment criteria meet the terms of the agreement.

Indirect costs (IDC) or facilities and administrative costs (F&A) are not considered profit and are eligible for reimbursement under certain circumstances. See “ Indirect Costs (Facilities and Administrative Costs)” later in this section.

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Maximum Allowable Federal Support and Required Match

In order to preserve the seed-money concept, ensure that the matching requirements of federal 402 funds are met, and ensure subgrantee investment (i.e., cost sharing) from the start of a project, the following match is required for Traffic Safety Grants:

  • A minimum 10 percent match is required each year for the first year through the third year of a grant award.
  • If a project extends beyond the third year, federal funding must not exceed 65 percent in the fourth year and 50 percent in the fifth and subsequent years.

A Cost Assumption Plan (CAP) must be submitted with a proposal request for funding.

NOTE: The CAP is built into the eGrants proposal pages and will be required to be completed by a potential subgrantee during proposal development. Proposals that exceed the minimum match requirement will be appropriately credited during proposal review.

NOTE: The STEP Impaired Driving Mobilization (IDM) grants require a minimum 25% matching share from the subgrantee, regardless of the project year.

NOTE: STEP Click It or Ticket Mobilization grants, STEP Incentive grants and Project Celebration mini-grants do not require a matching share from the subgrantee. However, if the subgrantee includes a matching share in the grant, the minimum matching share must be met by the end of the grant period.

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Allowable Matching (Cost Sharing)

Any project support can be in the form of cash or in-kind contributions, which generally consist of the value of services, supplies, and nonexpendable personal property. This may also include program income, as long as this is specifically approved in advance by TxDOT (see Chapter 5, Section 6).

The subgrantee can consider direct cash applications as well as in-kind contributions. In-kind contributions can represent the value of other resources directly applied to the project activities, such as equipment and personnel costs. Credit for such resources is limited to those costs normally allowable for funding under current National Highway Traffic Safety Administration (NHTSA) policy. In-kind contributions necessarily become part of the detailed project budget in order to be accountable as matching resources.

Concerning allowable matching (cost sharing), the Common Rule, §18.24, “Matching or Cost Sharing,” states that matching (cost sharing) requirements may be satisfied by either or both of the following:

  • “Allowable costs incurred by the subgrantee ... under the ... agreement...” (For example, the purchase of land or office furniture is not allowable; therefore, the purchase price of these items cannot be considered as a matching cost.)
  • “The value of third-party in-kind contributions applicable to the period to which the cost sharing or matching applies.”

The same section of the Common Rule includes the following qualifications and exceptions:

  • “Costs and third-party in-kind contributions counting towards satisfying a cost sharing or matching requirement must be verifiable from the records... These records must show how the value placed on the ... in-kind contributions was derived.”
  • “Third-party in-kind contributions count towards satisfying a cost sharing or matching requirement only where, if the party receiving the contributions were to pay for them, the payments would be allowable costs.”

Criteria for determining the acceptability of cash and in-kind contributions is also established in 49 CFR 18, “Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments.” These criteria require the in-kind match to be:

  • verifiable from the subgrantee’s records (See “ Documenting Matching Costs” below),
  • not included as contributions for any other federally-assisted program,
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  • necessary and reasonable for proper and efficient accomplishment of program objectives,
  • charges that would be allowable under 2 CFR, Part 225 (OMB Circular A-87) and UGMS,
  • provided for in the approved budget when required by the federal agency.
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Examples of Matching Costs

Examples of what might be considered as matching costs include:

  • allowable costs that are reimbursed by the subgrantee, such as:
    • indirect costs, as supported by an approved indirect cost rate
    • donated staff time
    • vehicle use
  • third-party in-kind contributions, such as:
    • volunteer time (see note below)
    • donated car safety seats
    • public service space or time.
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Valuation of Donated Services

Volunteer Services - Unpaid services provided by volunteers for a subgrantee will be valued at rates consistent with those ordinarily paid for similar work in the subgrantee’s organization. If the subgrantee does not have employees performing similar work, the rates will be consistent with those ordinarily paid by other employers for similar work in the same labor market.

Employees of Other Organizations - When an employee other than a subgrantee furnishes services free of charge in the employee’s normal line of work, the services will be valued at the employee’s regular rate of pay, exclusive of the employee’s fringe benefits and overhead costs. If the services are in a different line of work, then the valuation for volunteer services described above applies.

For example, if a local doctor helps stuff envelopes announcing a car safety seat check-up, that time spent would be estimated at local hourly clerical rates. However, if the same doctor donates time and medical expertise during a health fair, that time can be estimated at the doctor’s going rate.

The TxDOT Traffic Operations Division - Traffic Safety Section (TRF-TS) distributes annually to all districts and subgrantees a listing of approved volunteer match rates that are to be used for that fiscal year’s grants. Approved volunteer match rates are included for:

  • child passenger safety (CPS) instructor technicians
  • CPS technicians
  • all other volunteers.

Other volunteers include those assisting traffic safety programs for bike, occupant protection, safe communities, alcohol and other drugs, and other general traffic safety activities. The rates are based on the Texas rate found on the Independent Sector Website.

NOTE: CPS instructor technician and technician rates are based on the National SAFE KIDS match rates.

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Documenting Matching Costs

Matching costs will be subject to the same financial review procedures as cash expenditures and must be supported with appropriate documentation. To the extent feasible, documentation for matching contributions should be supported by the same methods used by the subgrantee’s organization to support all other costs.

Subgrantees and their subcontractors must retain records that clearly support the source, the amount, and the timing of all matching contributions. In addition, if a project has included within its approved budget contributions that exceed the required matching portion, the subgrantee must maintain records of these contributions in the same manner as it does the awarding agency funds and required matching share. The subgrantee has primary responsibility for subcontractor compliance with these requirements.

To adequately document matching costs, documentation should include:

  • a description of the goods or services contributed,
  • the purpose of the goods or services as related to grant performance,
  • the basis for determining value and supporting calculations and documentation,
  • time sheets for volunteer personnel services, and
  • any additional documentation necessary to authenticate the transaction.
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Grant Matching Calculator

Because organizations need to calculate their matching amount for their proposal budgets and also, during the year, monitor whether they are coming up with the appropriate matching amounts, TxDOT has developed a tool to allow organizations to calculate the matching amount at any time. All that needs to be done is to fill in:

  1. the TxDOT amount that an organization is asking reimbursement for, and
  2. the matching percentage that the organization is required to have or that was agreed to in the executed grant budget.

The calculator will do the rest and provide the TxDOT percentage, the matching amount, and the total grant amount. See the Grant Matching Calculator located on the eGrants Help Page to open up a simple table for the organization to fill in the required two fields. Despite the fact that an organization will not need it for this calculation, please remember that the matching percentage is of the total grant amount, not of the TxDOT amount.

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Indirect Costs (Facilities and Administrative Costs)

2 CFR, Part 225 (OMB Circular A-87), Cost Principles for State and Local Governments, describes indirect costs as those costs incurred for a common or joint purpose benefiting more than one cost objective and not readily assignable to the cost objectives. 2 CFR, Part 220 OMB Circular A-21, Cost Principles for Educational Institutions (8/29/97), uses the term “facilities and administrative” or F&A as an indirect cost equivalent.

Indirect costs (IDC) are typically based on the total federal amount of the grant, less those items that do not require administrative overhead to manage, such as subcontracts or rental fees for leased equipment.

EXAMPLE: A proposing agency has an IDC or facilities and administrative cost (F&A) rate of 10 percent. Of the proposed budget, $30,000 is subcontracted. $45,000 of labor and other direct costs is estimated. The 10 percent is applied only to the $45,000 of direct cost, resulting in $4,500 of indirect costs. Therefore the total estimated budget would be $79,500, as shown below:

NOTE: IDC and F&A are eligible for reimbursement only if they are included in the approved project budget, and the indirect cost rate or the allocation plan has been approved either:

  • in a prior audit conducted by a private or public auditing agency, or
  • by the governmental unit’s cognizant agency.
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