Ill. Admin. Code tit. 89 § 509.20

Current through Register Vol. 48, No. 45, November 8, 2024

Section 509.20 - Allowable/Unallowable Costs

Allowable/Unallowable Costs - Costs associated with Department programs are assumed to be allowable unless they are specified as unallowable by other Parts of Department rules, or by federal regulation, or by individual program policies or directives of the Department. The funding program determines whether a cost is allowable or unallowable based on the criteria listed in this Section and 44 Ill. Adm. Code 7000.30. Any grant program policy or directive that impacts whether a grant program cost will be allowable or unallowable must be disclosed to grant applicants prior to application or prior to execution or renewal of the grant agreement, whichever occurs first. Any denial of a significant, potential expenditure as unallowable shall, upon the grantee's written request, be made in writing within 14 calendar days after receipt of the grantee's request and such writing must describe why that cost is unallowable.

a) Expenses reimbursable from Department funds:

1) In general, expenses meeting all of the following criteria are reimbursable from Department funds if the expenses are:

A) Necessary and related to the provision of program services;

B) Reasonable to the extent that a given cost is consistent with the amount paid by similar agencies for similar services;

C) Not specified in subsection (b) as not reimbursable;

D) Allowable; and

E) Allocable.

2) All expenses that can be identified to a specific Department-funded program shall be charged directly to that program. Indirect costs (i.e., expenses not directly identifiable to a Department-funded program) shall be allocated to all benefitting programs, both Department-funded and other programs. Awardees are required to have an approved indirect cost rate in the State of Illinois Indirect Cost Rate Election System (ICRES) to be reimbursed for indirect costs in accordance with 44 Ill. Adm. Code 7000.420(e) through (i). Additionally, awardees must maintain a cost allocation plan, in accordance with Section 509.40(c), if they receive more than one source of funding or operate more than one program.

b) Expenses not reimbursable from Department funds, unless prior written authorization is received from the Department:

1) Research expenses. Program evaluation expenses are not considered research expenses.

2) Compensation for members of the Agency's governing body. This does not include reimbursement for travel or other Agency related business expenses incurred by these members;

3) Expenses related to entertainment of persons other than individuals who receive services through a Department program;

4) Individual staff or Agency association dues are not reimbursable except for the following situations:

A) Dues for group purchasing relationships for the exclusive purpose of cost saving on purchases.

B) Dues for membership that provide Agency staff with professional training and resources necessary to provide services funded by the Department;

5) Costs of attending professional meetings; e.g., association meetings and conventions are not allowable except for the portion of costs related to activities to enhance or improve services funded by the Department. (Costs for staff attendance at in-service training seminars and workshops can be reimbursed.);

6) Fund-raising expenses;

7) Bad debts;

8) Charity and grants (The cost of employee educational assistance can be reimbursed.);

9) The following types of interest expenses:

A) Interest on funds borrowed for investment purpose;

B) Interest on funds borrowed to create more than two months of working capital;

C) Interest on funds borrowed for the personal benefit of any person;

D) Interest on funds borrowed without a prior time-limited written agreement with the Department for the purchase of land, buildings and/or equipment for future expansion, until such assets are actively used in support of program services;

E) Interest in excess of the current market rate paid to individuals or organizations in less than "arm's length" transactions;

F) Interest charges on intra-Agency fund loans, e.g., interest recorded in the capital fund on cash loaned to the operating fund;

G) Interest expense to the extent that interest income was realized by investment of excess operating funds i.e., interest expense must first be offset against interest income and any remaining interest expense is eligible for reimbursement from Department grant funds;

10) The use of Department funds to develop commodity or equipment inventories. The usage of commodity inventories and the depreciation on fixed assets, if capitalized in accordance with generally accepted accounting principles (GAAP), are expenses that are eligible for reimbursement from Department funds;

11) Depreciation on fixed assets acquired with Department funds;

12) Cost of production of a work program. When the product of a Department-funded work program is saleable, the expenses of individual's wages and fringe benefits and of material costs are not reimbursable from Department funds;

13) In-kind contributions;

14) Alcoholic beverages;

15) The portion of the cost of automobiles furnished by the organization related to personal use by employees, including transportation to and from work, is unallowable as a fringe benefit or indirect cost;

16) Costs of fines, penalties, legal services, resulting from or in relation to the failure of the awardee to comply with federal, State, and local laws and regulations, are unallowable, except when incurred as a result of compliance with specific provisions of a Department award or program or instructions in writing from the Department;

17) Goods or services for personal use or purchased at less than an "arm's length" transaction for an amount greater than the fair market value;

18) The cost associated with lobbying any elected official of local, State or federal government is unallowable, including:

A) Expenses incurred in attempts to influence the outcome of any federal, State, or local election, referendum, or initiative;

B) Expenses incurred in attempts to influence the introduction, enactment, or modification of federal or State legislation or local ordinances; and

C) Expenses incurred in connection with legislative liaison activities when such activities are carried on in support of, or in preparation for, unallowable lobbying. Cost associated with providing technical and factual information on a topic directly related to the performance of a program funded by the Department, through hearing testimony, statement or letters to elected officials or representative body, are not considered lobbying cost and are allowable;

19) Relocation cost of awardee employees, except in the following situations:

A) The move is for the benefit of the employer;

B) Reimbursement to the employee is in accordance with an established written policy consistently followed by the employer; and

C) The reimbursement does not exceed the employee's actual (or reasonably estimated) expenses;

20) Gratuities;

21) Political contributions;

22) Related party transactions except for the following situations:

A) When the items for which expenses incurred are consistent with fair market value; and

B) There is evidence of approval in the minutes of the governing body;

23) Costs associated with goods or services paid in a "conflict of interest" situation.

24) Salaries above the federal threshold pursuant to the Salary Cap Summary (FY 1990 - present) at https://grants.nih.gov/grants/policy/salcap_summary.htm; and

25) Expenses requiring prior written approval in accordance with 2 CFR 200.407, if not approved in advance.

c) Unless excluded, either in whole or in part, in the language of the applicable Notice of Funding Opportunity, travel will not be denied, categorically, based on distance or cost per traveler, for any grant. However, whether travel, including distance and cost per traveler, is an allowable cost, is still subject to the allowable principles and any other cost principles applicable to grant expenditures, including but not limited to those listed in subsection (a)(1), "allowable cost" as defined in 30 ILCS 708/15 and 44 Ill. Adm. Code 7000.30, the travel cost limitations found in 30 ILCS 708/130, and the cost principles found in 2 CFR 200, Subpart E and incorporated by reference through 44 Ill. Adm. Code 7040.40(a)(4).

Ill. Admin. Code tit. 89, § 509.20

Amended at 26 Ill. Reg. 8547, effective May 31, 2002

Amended at 48 Ill. Reg. 14689, effective 9/27/2024