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Adult Education Administrator's Manual

Revised October 2008

Policy

Cost Principles (cont'd)

The following summary is provided for your convenience and as a "guide" only. Texas Education Agency (TEA) accepts no responsibility for the interpretation of the cost principles as outlined below. Grantees should consult the complete set of applicable cost principles to determine allowability and un-allowability of costs prior to expending funds. All costs must be budgeted and approved on the budget schedules in the applicable grant application prior to expenditure. Some costs require specific prior approval in the application, in which case the line item must be specifically budgeted and approved by TEA prior to expenditure.

**Cost Principles**
Items of Cost	OMB Circular A-87 State and Local Governments (i.e., school districts, ESCs, and open enrollment charter schools operated by a governmental entity)	OMB Circular A-122 Non-Profit Organizations (i.e., includes open enrollment charter schools operated by a non-profit organization)	OMB Circular A-21 Educational Institutions (i.e., institutions of higher education) (i.e., includes open enrollment charter schools operated by a college/university)
Accounting	Allowable.	Not addressed.	Not Addressed.
Advertising	Allowable for recruitment of grant personnel; procurement of goods and services; and disposal of surplus materials as specified in OMB A-87.	Allowable for recruitment of grant personnel; procurement of goods and services; and disposal of surplus materials as specified in OMB A-122. Unallowable for advertising that includes color, is excessive in size, or is for purposes other than recruitment of grant personnel (refer to section 44 of OMB A-122).	Allowable for recruitment of grant personnel; procurement of goods and services; and disposal of surplus materials as specified in OMB A-21. Unallowable for advertising that includes color, is excessive in size, or is for purposes other than recruitment of grant personnel (refer to section J.37 of OMB A-21).
Advisory Councils	Allowable with specific approval from TEA. NOTE: Ed-Flex programs do not require specific approval from TEA. For all other grant programs, these costs must be specifically budgeted and approved in the applicable grant application prior to expending funds.	Not addressed.	Not Addressed.
Alcoholic Beverages	Unallowable.	Unallowable.	Unallowable.
Alumni/ae Activities	Not addressed.	Not addressed.	Unallowable.
Audit Services	Allowable for audits conducted under the Single Audit Act (OMB Circular A-133).	Not addressed, but allowable for audits conducted under the Single Audit Act (OMB Circular A-133).	Not addressed, but allowable for audits conducted under the Single Audit Act (OMB Circular A-133).
Automatic Electronic Data Processing	Allowable.	Not addressed.	Not addressed.
Awards for Participation	Although not specifically addressed in OMB A-87, allowable when reasonable in cost and when necessary to accomplish program objectives. Acceptable awards include certificates, plaques, ribbons, and small trophies nominal in cost, or inexpensive instructionally related items such as pens/pencils to be used in the classroom.	Although not specifically addressed in OMB A-122, allowable when reasonable in cost and when necessary to accomplish program objectives. Acceptable awards include certificates, plaques, ribbons, and small trophies nominal in cost, or inexpensive instructionally related items such as pens/pencils to be used in the classroom.	Although not specifically addressed in OMB A-21, allowable when reasonable in cost and when necessary to accomplish program objectives. Acceptable awards include certificates, plaques, ribbons, and small trophies nominal in cost, or inexpensive instructionally related items such as pens/pencils to be used in the classroom.
Bad Debts	Unallowable unless stipulated in program regulations.	Unallowable.	Unallowable.
Bonding Costs	Allowable for employees who handle grant funds when in accordance with sound business practices.	Allowable for employees who handle grant funds when in accordance with sound business practices.	Not addressed.
Budgeting	Allowable for development, preparation, presentation and execution of grant budgets.	Not addressed, but allowable as in OMB A-87.	Not addressed, but allowable as in OMB A-87.
Civil Defense	Not addressed.	Not addressed.	Generally allowable (costs are distributed to all institutional activities)
Commencement and Convocation Costs	Not addressed	Not addressed.	Unallowable except as specified in OMB A-21.
Communication (includes postage telephone, FAX, messenger service, electronic communications, etc.)	Allowable.	Allowable.	Allowable.
Compensation for Personnel Services (includes salaries, wages, and fringe benefits) (Refer to Instructions to Schedule 3B to "Documentation Required for Charges to Payroll" for additional information.)	Allowable if costs are reasonable, comparable for similar work, and charges are supported with time distribution records or other documentation as stipulated in OMB A-87.	Allowable if costs are reasonable, comparable for similar work, and charges are supported with personnel activity reports as stipulated in OMB A-122.	Allowable if costs are reasonable and are supported with documentation that meets the criteria outlined in OMB A-21.
Conferences/meetings	Allowable when directly related to the grant program.	Allowable when directly related to the grant program.	Allowable when directly related to the grant program.
Construction, remodeling, or alterations	Generally not allowable. Allowable only when specifically provided for in the authorizing program statute.	Generally not allowable. Allowable only when specifically provided for in the authorizing program statute.	Generally not allowable. Allowable only when specifically provided for in the authorizing program statute.
Contingencies	Unallowable.	Unallowable.	Unallowable.
Contributions/Donations to Others	Unallowable.	Unallowable.	Unallowable.
Deans of Faculty and Graduate Schools	Not addressed.	Not addressed.	Salaries and expenses are allowable as they apply to the management/ administration of a grant program.
Defense, Prosecution, Claims and Appeals	Unallowable for prosecution of claims against federal/state government.	Unallowable in defense of antitrust suit or prosecution of claims against federal/state government. Other costs allowable or unallowable as stipulated in OMB A-122.	Unallowable for prosecution of claims against federal/state government. Other costs allowable or unallowable as stipulated in OMB A-21.
Depreciation and Use Allowance	Allowable based on acquisition cost as stipulated in OMB A-87.	Allowable based on acquisition cost as stipulated in OMB A-122.	Allowable based on acquisition cost as stipulated in OMB A-21.
Disbursing Service	Allowable for cost of disbursing funds by Treasurer or other designated officer.	Not addressed.	Not addressed.
Displays, Demonstrations, and Exhibits	Allowable when directly related to providing information about the grant program.	Allowable when directly related to providing information about the grant program.	Allowable when directly related to providing information about the grant program.
Donations/Contributions to Others	Unallowable.	Unallowable.	Unallowable.
Employee Morale, Health and Welfare	Allowable as stipulated in OMB A-87.	Allowable as stipulated in OMB A-122.	Allowable as stipulated in OMB A-21.
Entertainment (including amusement, diversion, social activities, and ceremonials and any costs associated with such)	Unallowable.	Unallowable.	Unallowable.
Equipment and Other Capital Expenditures (includes shipping costs and ancillary charges)	Allowable for specific grant purposes. Items with unit acquisition cost of less than $5,000 do not require specific approval from TEA. Items with unit acquisition cost of $5,000 or more require specific prior approval from TEA . Improvements or repairs which materially increase the value or useful life of the equipment are allowable with specific approval from TEA. Items requiring specific approval from TEA must be specifically budgeted and approved in the applicable grant application prior to expending funds.	Allowable for specific grant purposes. Items with unit acquisition cost of less than $5,000 do not require specific approval from TEA. Items with unit acquisition cost of $5,000 or more require specific prior approval from TEA . Improvements or repairs which materially increase the value or useful life of the equipment are allowable with specific approval from TEA. Items requiring specific approval from TEA must be specifically budgeted and approved in the applicable grant application prior to expending funds.	Allowable for specific grant purposes. Items with unit acquisition cost of less than $5,000 do not require specific approval from TEA. Items with unit acquisition cost of $ 5,000 or more require specific prior approval from TEA . Improvements or repairs which materially increase the value or useful life of the equipment are allowable with specific approval from TEA. Items requiring specific approval from TEA must be specifically budgeted and approved in the applicable grant application prior to expending funds.
Executive Lobbying Costs	Unallowable.	Unallowable.	Unallowable.
Field Trips	Unallowable.	Unallowable.	Unallowable.
Fines and Penalties	Unallowable except when incurred as a result of compliance with specific federal award provisions.	Unallowable except when incurred as a result of compliance with specific federal award provisions.	Unallowable except when incurred as a result of compliance with specific federal award provisions.
Food and Beverage Costs (State Auditor’s Office Ruling; not specifically addressed in federal cost principles.)	Unallowable for: Refreshments for staff meetings/staff training. Refreshments or meals at an awards banquet/function. Decorations. Food and beverage costs related to: entertainment, recreation, amusement, or social activities. Any food and beverage costs not necessary to accomplish the objectives of the grant program. Allowable for: Nutritional snacks for students participating in extended-day program or after-school tutorials, or child care while parents are participating in grant activities or nutrition education program. Refreshments for parent meetings/parent involvement activities (only when necessary to encourage attendance such as in low-income areas and to accomplish objectives of the grant program). Includes snacks for children receiving child care while parents are participating in activities.	Unallowable for: Refreshments for staff meetings/staff training. Refreshments or meals at an awards banquet/function. Decorations. Any food and beverage costs not necessary to accomplish the objectives of the grant program. Any food and beverage costs not necessary to accomplish the objectives of the grant program. Allowable for: Nutritional snacks for students participating in extended-day program or after-school tutorials, or child care while parents are participating in grant activities or nutrition education program. Refreshments for parent meetings/parent involvement activities (only when necessary to encourage attendance such as in low-income areas and to accomplish objectives of the grant program). Includes snacks for children receiving child care while parents are participating in activities.	Unallowable for: Refreshments for staff meetings/staff training. Refreshments or meals at an awards banquet/function. Decorations. Any food and beverage costs not necessary to accomplish the objectives of the grant program. Any food and beverage costs not necessary to accomplish the objectives of the grant program. Allowable for: Nutritional snacks for students participating in extended-day program or after-school tutorials, or child care while parents are participating in grant activities or nutrition education program. Refreshments for parent meetings/parent involvement activities (only when necessary to encourage attendance such as in low-income areas and to accomplish objectives of the grant program). Includes snacks for children receiving child care while parents are participating in activities.

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