Anchor: #i1010506

Section 6: Budget

Anchor: #i1010511

Overview

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

Anchor: #i1010521

Allowable Costs

Allowable costs are defined by the Office of Management and Budget (OMB) through established cost principles outlined in 2 C.F.R. Part 200 (Uniform Guidance).

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 “bears 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:

    Anchor: #RHKWILAR
  • Be necessary, reasonable and allocable to the grant program.
    • Anchor: #XHLLPLQK
  • Comply with limitations of the grant agreement as well as other applicable federal and state laws and regulations.
    • Anchor: #BYWNGTKE
  • Be allocated to the grant on a basis consistent with policies that apply to all activities of the subgrantee.
    • Anchor: #DTJUKYDF
  • 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.
    • Anchor: #KUGQQFML
  • 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.
    • Anchor: #WRPOBNER
  • 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 TxDOT policy also govern the Traffic Safety Program.

Policy or legislation provided by the National Highway Traffic Safety Administration (NHTSA) contains cost restrictions in addition to 2 C.F.R Part 200 (Uniform Guidance) and state laws and regulations. For example, the NHTSA Highway Safety Grant Program Resources Guide provides special rules regarding the use of federal NHTSA/Federal Highway Administration (FHWA) field-administered grants.

Anchor: #i1041681

Buy America Act

The Buy America Act, 23 U.S.C. §313, prohibits states from using highway grant funds under 23 U.S.C. Chapter 4 to purchase products unless they are produced in the United States. This prohibition applies to steel, iron and all manufactured products, unless the Secretary of Transportation has determined that it is appropriate to waive the Buy America Act requirement. For compliance purposes, “American-made” covers any product that is manufactured or assembled in the United States.

For more information on the Buy America Act, see:

Both documents are located on the eGrants Help Page.

Anchor: #i1010589

Unallowable Costs

In addition to the unallowable costs outlined in the Uniform Guidance, 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:

    Anchor: #IEMYHDYF
  • 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.
    • Anchor: #SGQHCQOD
  • 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.
    • Anchor: #XXRQGKFU
  • 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, “Program Income,” for more information.
    • Anchor: #FHXPETGK
  • Office Equipment. Federal highway safety grant funds cannot be used to purchase office furnishings.
    • Anchor: #KUUXBCLO
  • 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 12, “Property Management,” for more information on equipment/office furnishings.
    • Anchor: #JUOWSOSD
  • Out-of-State Travel. Out-of-state travel is prohibited without prior written approval from TxDOT. See Chapter 5, Section 10, “Travel for Subgrantees,” for more information on travel.
    • Anchor: #RSYRDRQY
  • Alcoholic Beverages and Food. Federal traffic safety funds cannot be used to purchase alcoholic beverages or food.
    • Anchor: #NVNISGET
  • Gratuities. Tips and/or gratuities are unallowable.
    • Anchor: #GUISIKBO
  • Cash Prizes/Gift Certificates. Cash prizes/gift certificates will be considered on an exception basis as allowable costs. TRF-BTS must approve a separate written request detailing special circumstances for their allowances. These authorizations will be considered on a limited basis.
    • Anchor: #YCAMNOAN
  • Lobbying. Federal and state grant funds cannot be used for lobbying activities.
    • Anchor: #NYWPUYTN
  • Promotional Items Exclusively for Subgrantee Staff . T-shirts, uniforms, polo shirts, caps, etc. cannot be purchased exclusively for subgrantee staff.

NOTE: Equipment regularly purchased under NHTSA grants may be subject to 2 C.F.R. §200.216, Prohibition on certain telecommunications and video surveillance services and equipment. This provision prohibits purchasing items produced by certain companies. See 2 C.F.R. §200.216 for more information.

Anchor: #i1010650

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.

Anchor: #i1010660

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 the following line items:

Anchor: #i1007421Budget Category Line Items

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 Salaries (100), 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 help system for assistance on entering budget items by budget category.

Anchor: #i1010685

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

Potential subgrantees must identify all staff positions by title, position description, 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, consultant, or volunteer.

Fringe benefit costs are those costs for employment of personnel other than the employee’s direct income (e.g., 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.

Anchor: #i1010707

STEP Proposal – STEP Overtime Rate and Salaries and Fringe Benefits (100 & 200)

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. For administrative duties, enter the position title and the position description in the budget.

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. Fringe benefits are defined as allowances and services provided by employers to their employees as compensation in addition to regular salaries and wages.

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 STEP grants.

Anchor: #i1010727

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:

    Anchor: #YLEMSLCU
  • 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).
    • Anchor: #JORQURPS
  • The TxDOT amount of Other (e.g., 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.

Anchor: #i1010754

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 of Texas rates (not TxDOT established rates). All travel-related expenses must be reasonable, necessary and directly related to the grant project.

The maximum reimbursement rate amounts under Texas Behavioral 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 on the General Services Administration Per Diem Rates web page.

Under Category 300, potential subgrantees must include only travel costs for project staff by identifying 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. Travel and Per Diem for subcontractors and non-grant employees must not be listed under Category 300.

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

Anchor: #i1010783

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 costs, and maintenance and fuel costs (which can include annual liability insurance 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 Travel and Per Diem: Enforcement Mileage in the eGrants help system for more information on travel requirements.

See Match Guidelines in the General Tool Box section of the eGrants Help Page for further assistance on determining match eligibility and examples of match funding sources.

Anchor: #i1010805

Equipment (400)

This category should include only those non-expendable, tangible personal property items with a useful life of more than one year, which cost $1,000 or more per item, and are specifically required to carry out traffic safety grant activities. The total cost of equipment includes modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for grant purposes, including tax, shipping, and installation. Subgrantees should enter a description, quantity, and unit acquisition cost for proposed equipment purchases. See Chapter 5, Section 12, “Property Management,” for definition of equipment and subgrantee property management responsibilities under the Texas Behavioral Traffic Safety Program.

NOTE: See 2 CFR §200.216, Prohibition on certain telecommunications and video surveillance services or equipment. This provision prohibits purchasing items produced by certain companies.

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 “Procurement Standards,” Chapter 5, Section 11.

NOTE: See Equipment on the eGrants Proposal Help Page for information on entering these costs into the eGrants Equipment Page.

Anchor: #i1010829

Supplies (500)

Reasonable costs for the purchase of office and other supplies may be allowable when there is a clear association between the purchase and the corresponding benefit to the highway safety project. Large volume supply purchases made at or near the end of the project may be disallowed for reimbursement. Supplies purchased for the project must be kept separately and will be inventoried during on-site monitoring visits.

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

Anchor: #i1046536

Contractual Services (600)

Contractual services are services of an individual, organization, firm or agency engaged in performing special services pertinent to traffic safety. All subgrantees awarding subcontracts shall comply with the terms and conditions of Sections 200.318 - 200.326 of the Uniform Guidance (2 C.F.R. Part 200).

Services provided by an individual, organization, firm, or agency, must be supported by a properly executed contractual or interagency agreement. Payments on contractual agreements must be supported by itemized invoices and made in accordance with the terms of the agreement. Agencies must also maintain records sufficient to detail the significant history of the procurement of the contractor.

Article 14, “Subcontracts,” of the Texas Behavioral 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.”

All subcontracts must be entered into eGrants upon execution, with the exception that subcontracts in excess of $25,000 must obtain prior concurrence from TxDOT before execution. Subcontracts can be added to eGrants through “Supplemental Report,” and can be found under “Examine Related Items” (beneath all submitted and/or approved RFRs). To submit an executed subcontract, or to request prior concurrence for a subcontract expected to exceed $25,000, follow the steps outlined below:

    Anchor: #MHNKQIJX
  1. Select “Create New” under “Supplemental.”
    2. Anchor: #QLWSUCCQ
  2. Select “I Agree,” when prompted “Are you sure you want to create a Supplemental Report?”
    3. Anchor: #UYQGRVXS
  3. Under “View, Edit and Complete Forms,” choose “Subcontract.”
    4. Anchor: #NAMLWLIA
  4. Follow the instructions and complete the subcontract form and enter “Save.”
    5. Anchor: #QGKJKQFK
  5. Complete the checklist request process by changing the status of the form (found under “Change the Status”) to “SR Submitted.”

TRF-BTS shall periodically monitor all subgrantee contracts and professional service agreements to verify compliance with the established state and/or local procurement procedures.

See Chapter 5, Section 11, “Procurement Standards,” for more information on subcontracts.

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

Anchor: #i1010905

Other Miscellaneous (700)

Other miscellaneous costs include the cost of planned production of PI&E materials (See Chapter 5, Section 9) and any other miscellaneous costs, such as volunteer hours 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 traffic safety grant program, and comply with applicable federal and state laws and regulations.

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

Examples of other miscellaneous costs include:

Anchor: #i1010922

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 Cost in the eGrants help system.

Anchor: #i1010939

Reimbursement

Proposals selected for inclusion in the HSP become cost reimbursable grant-in-aid agreements. 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.

Anchor: #i1010949

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 2 C.F.R. Part 225 (formerly 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.

EXAMPLE:

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

EXAMPLES:

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.

Anchor: #HKHNNEGK

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.

Anchor: #i1011058

Allowable Matching (Cost Sharing)

Any project support can be in the form of cash or in-kind contributions, which generally consists of the value of services, supplies, and non-expendable 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 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 Uniform Guidance, §200.306, “Cost Sharing or Matching,” states that matching (cost sharing) requirements may be satisfied by the following:

    Anchor: #NTBTDWKB
  • “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.)
    • Anchor: #SPBLDOWT
  • “The value of third-party in-kind contributions applicable to the period to which the cost sharing or matching applies.”
    • Anchor: #FTUMKSAF
  • Volunteer services furnished by third-party professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for third-party volunteer services must be consistent with those paid for similar work by the non-federal entity. In those instances in which the required skills are not found in the non-federal entity, rates must be consistent with those paid for similar work in the labor market in which the non-federal entity competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, necessary, allocable, and otherwise allowable may be included in the valuation.

Criteria for determining the acceptability of cash and in-kind contributions is established in 2 C.F.R. §200.306 of the Uniform Guidance. These criteria require the in-kind match to be:

    Anchor: #BRGQRMSA
  • Verifiable from the subgrantee’s records (See “Documenting Matching Costs” below).
    • Anchor: #OAGCOKMQ
  • Not included as contributions for any other federally-assisted program.
    • Anchor: #UWPVOSFX
  • Necessary and reasonable for proper and efficient accomplishment of program objectives.
    • Anchor: #MKJWIKUC
  • Charges that would be allowable under the applicable cost circulars.
    • Anchor: #OBEUXGFF
  • Charges that are not paid by the federal government under another award, except where authorized by federal statute to be used for cost sharing or matching.
    • Anchor: #KWUIWRLI
  • Charges that are provided for in the approved budget when required by the federal agency.
Anchor: #i1011137

Examples of Matching Costs

Examples of what might be considered as matching costs include:

Anchor: #i1011186

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 of an organization 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. However, if an employee is federally-funded, their donated services cannot be used as a source of match to traffic safety grants.

EXAMPLE: 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.

TRF-BTS 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:

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 most recent rate found on the Independent Sector Website.

NOTE: CPS Instructor Technician and Technician rates are based on the National Safe Kids Volunteer Match Rate.

Anchor: #i1011236

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:

NOTE: If there is a shortfall in the match provided, the subgrantee will potentially be required to pay back any federal funds because of their match shortage.

See Match Guidelines available on the eGrants Help Page for further assistance on determining match eligibility and examples of match funding sources.

Anchor: #i1011280

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:

    Anchor: #FNGBVROR
  • The TxDOT amount that an organization is asking reimbursement for.
    • Anchor: #DXPLICDK
  • 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.

Anchor: #i1039058

Cost Allocation

Cost Allocation means the process of assigning to two or more programs the costs of an item shared by the programs. The goal is to ensure that each program bears its fair share, and only its fair share, of the total cost of the item. For purposes of cost allocation in traffic safety subgrantee agencies, cost allocation refers to the allocation of costs to various sources of funding, not to accounting categories.

Cost Allocation Plan means a written account of the methods used by the grantee agency to allocate costs to its various funding sources.

Costs incurred for a common or joint purpose benefiting more than one cost objective could be classified as an indirect cost if a subgrantee has an approved indirect cost rate. If no indirect cost rate exists, then a cost allocation plan can be used to allocate costs to its various funding sources.

NHTSA’s Highway Safety Grant Funding Guidance, Part II, E., “Proportionate Funding,” states:

“For all activities and equipment to be funded which have components both related and unrelated to a highway safety grant, the federal share is based proportionately on the projected utilization for the federal (NHTSA) grant purposes.”

This requirement to share (allocate) the costs of shared resources can be met by using logical and rational methods to ensure that each program is paying only its fair share of the cost of an item used in common, and that no program is subsidizing another. Generally, the methods used to allocate a shared cost should be the simplest, most straightforward way of allocating this type of cost fairly. Complex, highly detailed methods should be avoided when a simple one will achieve the objective.

The nature and use of each cost item determines the most suitable measure for that item and the best scheme for the allocation of costs. Taking an approach such as "Highway Safety has the largest budget, so Highway Safety should pay the largest share of costs" is not acceptable. The Highway Safety Program's share of an agency budget is determined by the allowable and reasonable cost of providing highway safety services as reflected in the cost allocation plan, not by the quantity of highway safety dollars going into the agency's total budget.

Methods, rules or formulas that use percentages or fractions of cost items are acceptable. For example, a method of allocating staff costs could be as simple as a statement of the percentage of time attributable to a funding source. If an individual spends half of the day on Traffic Safety activities, another 25 percent on activities supported by funding source A and 25 percent on activities supported by funding source B, then the cost allocation rule is 50 percent to Traffic Safety, 25 percent to funding source A and 25 percent to funding source B. These percentages may then be applied to all relevant personnel costs for that individual (or group of individuals) for a budget period. Minute-by-minute, hour-by-hour allocation is not required, but there must be a way to reasonably establish the basis for the allocation rule, such as agency or classroom schedules or prior year reports.

EXAMPLES:

Allocation based on usage. The cost of office supplies allocated based on the quantity used on each project:

    Anchor: #AHRGMGRM
  • A Traffic Safety subgrantee uses five boxes of toner per month on its Traffic Safety grant and seven boxes of the same toner per month on another funding source, Project B. The department orders 12 boxes of toner per month at $37.99 per box (including tax and shipping). The total cost is $455.88. Traffic safety should be charged $189.95 ($37.99/box x 5 boxes) and Project B should be charged $263.93 ($37.99/box x 7 boxes).

Allocation based on number of hours. The cost of computer software allocated based on the number of hours logged for each project:

    Anchor: #UPASJBPB
  • A Traffic Safety assistant uses the same software program for two projects. The assistant is given an individual sign-on name for each of the projects. By signing on with individual user names, the computer is able to keep track of how many hours are spent on each project. The quarterly report indicates 55 hours were spent on Traffic Safety and 305 hours were spent on Project B. This is all of the work that will be done with this program. The software cost $390 total. Traffic Safety should be charged $59.58 (55 hours/360 hours x $390) and Project B should be charged $330.42 (305 hours/360 hours x $390).

Allocation based on percentage effort. The cost of office supplies proportionately allocated based on the percentage of effort charged to each project:

    Anchor: #SWAFJIFD
  • A Traffic Safety subgrantee spends 70% effort on Traffic Safety and 30% effort on Project B. The Traffic Safety subgrantee uses office supplies totaling $6,000/year on the two projects. Traffic safety should be charged $4,200 (70% of $6,000) and Project B should be charged $1,800 (30% of $6,000).

To carry out the requirement of appropriation law, a cost allocation plan should:

    Anchor: #LOGIITUS
  • List the sources of federal and other revenue for the program supported by historical or other data to substantiate the amounts.
    • Anchor: #RMIUAYGH
  • Describe the methods used to determine the allocation of the costs of shared resources to the various funding sources.
Anchor: #i1011307

Indirect Costs (Facilities and Administrative Costs)

Indirect costs are those that have been incurred for common or joint purposes. These costs benefit more than one cost objective and cannot be readily identified with a particular final cost objective without effort disproportionate to the results achieved. After direct costs have been determined and assigned directly to federal awards and other activities as appropriate, indirect costs are those remaining to be allocated to benefited cost objectives. A cost may not be allocated to a federal award as an indirect cost if any other cost incurred for the same purpose, in like circumstances, has been assigned to a federal award as a direct cost.

Indirect costs are normally charged to federal awards by the use of an indirect cost rate. A separate indirect cost rate is usually necessary for each department or agency of the governmental unit claiming indirect costs under federal awards.

For additional information, refer to 2 C.F.R. Part 200.

Allowable indirect costs, as defined in the regulations, shall be reimbursed at a negotiated predetermined fixed rate to agencies that have submitted to TRF-BTS a federally approved Indirect Cost Rate Plan and Approval Letter.

TRF-BTS requires that subgrantees approved by TxDOT to receive indirect costs provide annually a current Indirect Cost Rate Plan from the cognizant agency stating the negotiated Indirect Cost Rate (IDCR). Approved IDCRs are good until amended. If TRF-BTS wishes to reimburse an agency or any other subgrantee, governmental or nonprofit organization which otherwise cannot obtain an IDCR Agreement, it would have to negotiate and/or monitor the subgrantee’s plan. If this is the case, TRF-BTS will partner with TxDOT’s Compliance Division (CMP) to review the IDCR Agreement and make recommendations for approval. TRF-BTS will then negotiate and approve the IDCR Plan proposed by a subgrantee.

TRF-BTS shall establish annually a list of all subgrantees approved to charge indirect costs through a current IDCR, and monitor the list to determine that all required IDCRs and letters are current and maintained with the TRF-BTS files. TRF-BTS shall ensure that claims received from subgrantees, which include indirect costs, are determined to be charged accurately.

2 C.F.R. Part 200, Appendix III (formerly OMB Circular A-21, Cost Principles for Education Institutions), is the federal regulation that provides additional guidance on IDCRs for universities. Universities are allowed to apply the IDCR to a broader range of costs as specifically identified in the regulation and referred to as “modified total direct costs.” The modified total direct costs, referred to as “Facilities and Administration (F&A) Costs,” may include all salaries and wages, fringe benefits, materials and supplies, services, travel, and subgrants and subcontracts up to the first $25,000 of each subgrant or subcontract (regardless of the period covered by the subgrant or subcontract). Equipment, capital expenditures, charges for patient care and tuition remission, rental costs, scholarships and fellowships, as well as the portion of each subgrant and subcontract in excess of $25,000, must be excluded from modified total direct costs. Other items may only be excluded where necessary to avoid a serious inequity in the distribution of F&A costs.

2 C.F.R. Part 200, Appendix IV, Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Nonprofit Organizations, uses similar language:

"However, a cost may not be assigned to an award as a direct cost if any other cost incurred for the same purpose, in like circumstance, has been allocated to an award as an indirect cost.”

Anchor: #i1042062

Notes

    Anchor: #AIWPTJNU
  • If a state/local governmental subgrantee is considering changing a position to direct federal funding, care must be taken to avoid supplanting (the substitution of federal funding for a general cost of government).
    • Anchor: #PBCSKSHV
  • State Subgrantees. A state agency may be paid the state’s negotiated rate obtained from a cognizant agency as evidenced by a letter on file which is renewed annually.
    • Anchor: #BBKQACJW
  • Local and Nonprofit Subgrantees. Where a local government is not a primary recipient of federal funds, TxDOT will negotiate and/or monitor the subgrantee’s IDCR Plan and an annual approval letter approved by a local government containing a certification signed by a government official specifying the year applied. The rate proposal and related documentation must be made available for federal and state audit for four years after final payment and other pending matters are closed, and should be maintained annually in the subgrantee’s file. See 2 C.F.R. Part 200, Appendix IV. The rate does not have to be federally approved. TxDOT cannot routinely grant an IDCR to subgrantees. Each subgrantee must have submitted an IDCR Plan for review and acceptance.
    • Anchor: #XMJUXBFI
  • Non-profit agencies must also provide an annual approval letter containing a certification signed by the Board of Directors, a CPA or an Executive Director and specifying the year applied and the rate. Local agencies, universities and contractors that have a negotiated rate by a cognizant agency may be paid that rate.
    • Anchor: #OKCMDRQV
  • TxDOT and the subgrantee may mutually agree to an IDCR lower than that established by the cognizant agency. If any proposing agency has never had a negotiated indirect cost rate by a cognizant agency or TxDOT, the proposing agency may include an indirect cost rate of up to ten percent (10%) of the total amount of federal funds awarded for all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and subawards and subcontracts up to the first $25,000 of each subaward or subcontract. TxDOT will allow a subgrantee to use the 10% de minimus rate if they do not have a current negotiated rate.
    • Anchor: #BIFJDSBO
  • The level of risk and exposure should be factors when determining the required oversight.

NOTE: The responsibility does not end after a signed agreement or certificate is placed in the project file. TxDOT must periodically review and monitor subgrantee IDCR plans to provide reasonable assurance that the requirements are being followed. This monitoring should ensure that the plan is current and accurately reflects indirect costs.

Previous page  Next page   Title page