POS Vendor Application Index and Instructions
I. Purchase of Service System
[ A. Overview of the Purchase of Service System ]
[ B. Submission of Purchase of Service Vendor Application ]
[ C. Negotiations and Determination of Rates ]
[ D. Approval/Disapproval of Vendor Application ]
[ E. Vendor Agreement ]
[ F. Vendor Sheet ]
[ G. Purchasing Services by DRS Field Offices and Central Office ]
[ H. Renewal Process ]
[ I. Vendor Responsibilities ]
[ J. Vendor Appeal Procedures ]
II. Definitions of Purchasable Services
[ A. Introduction ]
[ B. Allowable and Unallowable Budget Expenditures ]
[ C. Included and Restricted Revenue ]
[ D. Definitions of Budget Categories ]
IV. Forms Instructions
[ Form 1 Checklist and Certifications 34 ]
[ Form 2 Provider Demographic Sheet (rev. 8/01) 35 ]
[ Form 3 Service Description 36 ]
[ Form 4 Employee Compensation & Services 38 ]
[ Form 5 Depreciable Assets 39 ]
[ Form 6 Restricted Funds 41 ]
[ Form 7 Revenued and Expenses 42 ]
[ Form 8 Budget Allocations (rev. 2/99) 43 ]
[ Form 9 Service Unit Costs (rev. 2/99) 46 ]
[ Form 10 Service Unit Comparison 49 ]
I. PURCHASE OF SERVICE APPLICATION SYSTEM
A. Overview of the Purchase of Service System
The purpose of the Purchase of Service system is to approve equitable and accountable rates for the purchase of vocational services. The Department of Rehabilitative Services (DRS) will use these rates to pay for eligible consumers placed with approved providers. Rates are based on each provider's proposed costs of providing a particular service and are approved for a twelve month period. This is a prospective rate approval process.
The Purchase of Service system does not commit or guarantee a level of DRS financial support. It merely sets up a mechanism for a DRS rehabilitation counselor to purchase an appropriate service for a DRS consumer.
To obtain initial approval a provider shall comply with the Criteria and Procedures for Review and Approval of Employment Services Organizations Vendor Applications and submit a completed Purchase of Service Vendor Application.
B. Submission of Purchase of Service Application (POS)
In order to participate in the Purchase of Service system, a vendor must determine, in cooperation with local DRS staff, which services to sell. The provider should then request the POS application forms from the Virginia Department of Rehabilitative Services, Office of Employment Services and Special Programs (OESSP).
The following steps are involved in applying for initial Purchase of Service vendor status:
1. A letter of support from the local DRS Human Services Field Manager in the service areas of the new vendor.
a. Initial Application
b. Request a Purchase of Service Application package and Criteria and Procedures for Review and Approval of Employment Services Organizations Vendor Applications.
c. Complete the Vendor Application forms and POS Application forms and submit them with all required documentation. For Supported Employment Services, send the information to the attention of E. Scott Fraley, Supported Employment Program Coordinator. For non-Supported Employment vendorships, send the information to the attention of Louis T. (Tim) Olive, Program Administrative Specialist.
2. The mailing address for these individuals is:
Department of Rehabilitative Services
Office of Employment Services and Special Programs
Richmond, VA 23229
804-662-7000
3. Once the POS application has been reviewed and approved by the Program Coordinator, the Purchase of Service Program Specialist in the DRS Central Office will begin the fiscal review.
4. Within 30 days, the vendor will be contacted either to provide additional information or clarification or to begin the negotiation process.
5. Renewals
a. For rate changes based on the CPI-W use Table 4 Commodity and Service Group - Other Services Column 4. Submit a rate form by the 20th of the month prior to the expiration of the rates. The index is usually posted around the 16th of the month. For example, if rates are due for renewal July 1, new rates must be submitted by June 20th and the index used would reflect the most recent rate, usually posted by the 16th of June.
b. For rate changes based on the Purchase of Services Application: the POS application must be submitted no later than 30 days prior to the exploration of rates. For example, if rates are to be renewed July 1, the POS application must be received no later than June
c. Submit 2 copies of an updated curriculum to reflect any anticipated changes in an approved service.
The above should be submitted to the Purchase of Service Program Specialist prior to the termination date of the rates.
C. Negotiations and Determination of Rates
After the POS application has been returned to the OESSP, various tasks will be performed in preparation for rate negotiation with the vendor. These tasks may include, but are not limited to, the following:
1. Vendor contact if any information is incorrect, missing, or unclear.
2. Verification of the accuracy of budget figure calculations on appropriate forms.
3. Review and analysis of all budgetary information submitted. Review cost items for reasonableness.
4. Comparison of proposed budget figures to annual audit report submitted by vendor and prior POS applications.
5. Review of the calculation of utilization/absentee levels.
6. Review of allowable and unallowable costs.
7. Review of the various services being offered and what quantity of services are to be delivered in each category.
8. Analysis of the calculations of the proposed cost per unit of each service to be delivered.
The rate negotiation process with the vendor may involve such issues as the reasonableness of a particular budget line item, the estimated number of units to be provided that coming year, the staff-to-consumer ratios, or comparisons between the utilization rates over several years.
D. Approval/Disapproval of Vendor Application
If the vendor and the negotiator can agree to a unit price for each service to be provided by the vendor, the application will be approved for one year (or a pre-determined, agreed-upon time frame). A letter acknowledging approval will be sent to the vendor along with a copy of the Vendor Sheet (listing services and rates) and the Vendor Agreement for signature.
If the application is disapproved, a letter of explanation will be sent to the vendor. Applications may be disapproved for such reasons as failure to submit required information, or failure of the vendor and negotiator to agree on unit prices, or failure to provide quality services to the DRS consumers.
The Vendor Agreement provides protection to the Department and the vendor by clearly defining respective roles and expectations of both through a written agreement. The Vendor Agreement should be carefully read prior to signing so the vendor will be thoroughly familiar with all requirements of the agreement.
The Vendor Agreement is written for a period of three years with vendor rates being negotiated every year using the CPI-W Index or by submitting a complete Purchase of Service (POS) Application Package.
Renewal of the vendor agreement is completed every three years. After rates are agreed upon, the vendor agreement is sent to the vendor for signature. An officer or official designee of the organization must sign the agreement. The signature page is then returned through the OESSP to the Commissioner of DRS for final approval and signature. A signed copy is returned to the vendor.
The Vendor Sheet contains basic logistical information about the vendor and the services and rates which have been approved. The form is completed by the negotiator and is attached to and becomes Appendix A of the Vendor Agreement.
The Vendor Sheet contains the agreement's effective and termination dates, the vendor's name, address, contacts, phone numbers, approved services and corresponding Service Item (S/I) Codes, units, and rates, and the DRS-assigned vendor number.
Once new rates are agreed on, the negotiator will distribute a copy of the Vendor Sheet to local DRS offices to be maintained in the DRS Training and Facilities Manual. This manual is utilized by DRS staff to identify approved vendors of approved services.
G. Purchasing Services by DRS Field Offices and Central Office
After rates are approved, the purchase of employment services may occur between the DRS field counselor and the vendor. Once a vendor is selected, the counselor will issue an authorization to the vendor. The vendor shall only provide services to a consumer after receiving an authorization. The vendor shall bill for only those services which have been authorized and subsequently provided. The vendor shall submit any required reports or evaluations with each bill.
There is an exception regarding the purchase of Extended Employment Services (EES/LTESS). The purchase of these services is arranged entirely through the OESSP in Richmond, not by the field counselors. Facilities that are approved to vend these services must submit application on behalf of a specific consumer to Judy E. Hill, of the Office of Employment Services and Special Programs for prior approval. If approved, the facility may then provide EES/LTESS to that given consumer, directing all correspondence and billing to the OESSP.
Renewal dates for vendor's rates are set at one (1) year intervals. The yearlong intervals are agreed upon by the individual organization and the OESSP and are based on fiscal budget or calendar years.
To modify rates for the upcoming year, the vendor may submit a new rate using the CPI-W Index on the 20th of the month prior to the expiration of the vendor rate or complete a POS Application package to the POS coordinator one month prior to the expiration of the vendor rate.
To renew the rates at the same level, the vendor must submit a letter of extension of rates to the POS coordinator by the review date. The vendor must also certify whether or not there have been any significant changes in the vendor's situation, such as changes in the budget, number or qualifications of staff, number of consumers served, expansion or deletion of services, etc.
If the proposed rate increase is higher than the CPI-W Index increase, a POS application must be completed for all vended services.
1. Returning the Vendor Agreement for Purchase of Services
A signed current Vendor Agreement must be on file with DRS. Failure to return the
Agreement promptly can result in delay or termination of approval.
2. Complying with the Vendor Agreement
The vendor is responsible for meeting and maintaining all applicable State and federal
standards relating to the services provided and described in the Vendor Agreement. The
vendor is also responsible for complying with all provisions and requirements in the
Vendor Agreement.
3. Budget and Record Keeping
Each vendor providing services under a Vendor Agreement is required to furnish budgetary
information at least annually to DRS. All expenses are to be specifically identified,
including both allowable and unallowable expenditures. The vendor is also responsible for
providing accurate information describing vendored services and for maintaining accurate
documentation of the costs of delivery of each service.
Each vendor must have record keeping capabilities to identify each consumer as an individual, how many units of a service during any given month that consumer received, and provide accurate bills and reports that reflect the actual services delivered to that consumer.
In addition, each vendor must submit an annual financial audit report conducted by an external auditing firm or consultant. Submission of this report is required yearly, independent of whether a complete POS is submitted or just the letter of extension is requested.
4. Reporting Changes
The vendor is responsible for reporting to DRS any significant changes in the proposed
delivery of services from that stated in the application or in the Vendor Sheet. These
include, but are not limited to, changes in service quality, key personnel, ability to
deliver anticipated volumes of services, etc. All substantial budgetary changes must also
be reported as they occur.
5. Deadline for Submitting Information for Renegotiations
Any information or data which are to be used in renegotiations to modify the vendor's
rates under the Agreement must be submitted to the negotiator at least ninety (90) days
prior to the proposed "Effective Date" of the changes (expiration date of
current rates). The vendor is responsible for submitting all necessary information on
time. Failure to do so may result in an extension of current rates, the reduction of those
rates, or termination of the Vendor Agreement in total.
Providers may appeal any disputes which cannot be settled through negotiation with the Purchase of Service Coordinator. A written statement of appeal describing the situation shall be submitted to the DRS Commissioner. After investigating the dispute, the DRS Commissioner shall send a written decision to the provider and retain a copy for the file along with all documents related to the appeal. The decision shall be final though the provider retains rights under law.
II. DEFINITIONS OF PURCHASABLE SERVICES
Work Adjustment Training: Provides planned and structured training in a work setting in order to assist the consumer to develop work-appropriate general habits, attitudes, and behaviors. Specific emphasis is given to work deficits and vocationally related problems identified by the employment services organization, the DRS counselor and the training goals established in the consumer's Individualized Plan for Employment (IPE).
Extended Employment Services: Provide a long term employment program in a structured work environment. The individuals served receive more intensive supervision, training, and support services than are available in a regular work setting. The major goal of this program is successful employment in a structured environment, and can occur within a sheltered setting or within a structured environment in competitive industry. Types of work provided in this program include subcontract work, prime manufacturing, and government contract work.
Situational Assessment: Provides systematic observation of a consumer's behaviors in an environment which reflects or simulates a realistic employment site and that can provide information concerning work habits and general job skills. Situational Assessment generally lasts from 15 to 30 days.
Supported Employment Services: Supported Employment services provide competitive work in an integrated work setting with on-going support services for consumers with severe disabilities. Supported Employment may be appropriate for individuals with severe disabilities when competitive employment has traditionally either not been a viable employment option or it has not been successful. Supported Employment may be Individual Competitive Placement or Group Models.
Individual Competitive Placement (Job Development, Job Placement ∓ Training, and Follow Along Services): Utilizes an employment specialist, frequently called a job coach, to secure the placement of an individual with a severe disability into integrated competitive employment with support at the job site. This support initially is very intensive and can last for the entire work day. It usually focuses on skill acquisition, learning and work routine and necessary accommodations to assure that the supported worker has the opportunity to become proficient. The presence of the employment specialist decreases as the worker becomes more productive and integrated into the work place. Ongoing supports must include, at a minimum, twice monthly contact with the supported employee at the work site to assess job stability. However, it may be determined that off-site monitoring is more appropriate for a particular individual. Off-site monitoring must consist of at least two face-to-face meetings with the individual and one employer contact monthly.
Situational Assessment for Supported Employment: Utilizes real work sites in the community for the systematic observation of a consumer in order to identify work site characteristics and consumer adaptation, training procedures, and support needs related to the individual's success in supported employment.
Group Models: All provide on-going on-site supervision and are appropriate for individuals needing this more constant level of supervision than is provided in the individual competitive placement models of supported employment utilized by DRS counselors. Group models are:
a. Mobile Crew: A group of workers with severe disabilities who travel together to multiple work sites in the community and perform work tasks together.
b. Enclave: A group of workers with severe disabilities who are employed within a "host" company in the community and provided an integrated setting in which to perform their job duties.
c. Entrepreneurial or Small Business: The development of a private business which produces goods and/or services on a sub-contract or prime manufacturing basis and employs workers with severe disabilities to work along with co-workers who are non-disabled.
Supervised Work Experience: Assist persons recovering from severe psychiatric illness to obtain or improve general work skills and to develop an interest and confidence in securing more permanent competitive employment. Service is also known as Transitional Employment (TEP).
Transportation
III. APPLICATION SPECIFICS
The forms which follow in this section are to be completed by the applicant agency, signed by its duly authorized representative, and submitted to the Purchase of Service Coordinator prior to:
1. Initial Agreement/rate negotiation, or
2. Some interim rate/quality changes as determined by the negotiator; or
3. Renewals for a subsequent Agreement involving rate/quality change.
Before beginning to complete the forms, the applicant must determine on Form 2, number 10 the proposed budget beginning and ending dates. The proposed year is the year on which the rates will be based. This period should not be more than one year. The applicant shall use the dates used for budgeting in his agency. It is not necessary for the applicant to use the dates of the State's fiscal year (July 1 to June 30). The applicant should indicate and discuss the periods of time to be shown whenever it is necessary to use one or more periods of less than one calendar year duration. The Current Year figures used should be actual figures for the completed portion of the year expanded by estimating for the rest of the Current Year period. The prior year figures should match the actual figures from the agency's independent audit for that period.
Before beginning to complete the forms, the applicant may also note that certain portions of the package may be omitted for the reasons specified on Form 1. In addition, a single service agency may omit Form 8.
A single service agency is one which provides only one service, not just one service to DRS, but, only one service provided by the agency at all.
The application is designed so that all revenues and expenses of the agency shall be disclosed not just those associated with the rehabilitation or vocational programs.
A waiver to disclosing all revenues and expenses may be requested by large agencies for whom the provision of rehabilitation or vocational programs is a small part of the agency mission. In this case an agency may just disclose those revenues and expenses associated with the rehabilitation or vocational programs. Prior written approval must be granted for this waiver.
Complete instructions for completing the forms in the Purchase of Service Vendor Application will be found in Section IV of the application package.
Computer generated forms may be substituted for these forms as long as the same information is presented in the same format.
B. Allowable and Unallowable Budget Expenditures
Each agency is expected to employ sound management policies in fulfilling its obligations. Each should be responsible for employing whatever form or organization and management techniques necessary to assure proper and efficient administration.
Total cost is the sum of the allowable direct and indirect cost allocable to the service/contract less any applicable credits. Any generally accepted accounting method of determining or estimating costs that is equitable under the circumstances may be used.
The budget forms contain categories, such as employee compensa-tion, occupancy, travel, supplies, and they require allowable and unallowable costs to be shown. However, unallowable costs must be listed in the column labeled "Excluded and/or Unallowable" and deducted to derive the "Revised Budget."
The allowability of individual budget expenditure items with the exception of interest which is discussed on pages 12 and 13 is described in federal regulations in OMB Circular A-122 for non-profit agencies and A-87 for public agencies as determined by:
Reasonableness - Whereby costs do not exceed that which would be incurred by an ordinarily prudent person in the conduct of competitive business, as follows:
1. The cost is generally recognized as ordinary and necessary for operation.
2. Restraints and requirements imposed by generally accepted sound business practices, arms length bargaining, federal and State laws and regulations are used.
3. The action is in line with those which a prudent agency would take concerning its responsibility to the organization, the public, the government, its employees, its consumers, etc.
4. There are no significant deviations from the established practices of the agency.
Allocability - Whereby costs are assignable or chargeable to a particular cost objective in accordance with the relative benefits received, as follows:
1. The cost is incurred specifically for the contract/service.
2. Any combined costs can be distributed in reasonable proportion to the benefits received.
3. The cost is necessary to the overall operation of the agency.
Allowable costs are as follows:
1. Advertising - solely for:
a. recruitment of personnel required for performing obligations arising under the contract;
b. procurement of scarce items for performance of the contract;
c. disposal of scraps of surplus acquired in the performance of the contract; and
d. providing services specified in the contract.
2. Bidding Costs - which are the preparation of bids and applications including scientific, engineering and cost data necessary to support the bid or application if they are incurred within the contract period.
3. Bonding Costs - which are assurances against financial loss due to theft, default, etc. and include such bonds as performance, bid, fidelity, etc. Allowable bonding costs are those which are:
a. provided for within the contract, and
b. required by the agency in the general conduct of operations, providing the rates and premiums are reasonable under the circumstances.
4. Civil Defense Costs - which are undertaken on the agency's premises in response to suggestions or requirements of civil defense authorities when they are allocated to all the work of the agency. (Capital assets obtained through civil defense costs must be charged with depreciation or use charges along with other fixed assets.)
5. Compensation for Personal Services - to the extent that they are:
a. related to the contract work;
b. reasonable for the services rendered; and
c. comparable to that paid for similar work in the labor market.
Compensation includes salaries, wages, employees' insurance, vacations, holidays, sick leave, unemployment insurance, etc.
6. Capital Expenditures - which are the cost of equipment, buildings, and building and equipment repairs which materially increase the useful life or value of the buildings or equipment but only when the repairs are provided for in the contract. These costs must be accounted for only through depreciation or use allowances as explained in (7) below.
7. Depreciation and Use Allowances - which are the compensation of the agency for the use of buildings, capital improvements, and usable equipment on hand by either depreciation or use allowances, as follows:
a. Depreciation is a charge to current operations which distributes the cost of fixed assets less a residual value over the estimated useful life of the asset, provided adequate records are maintained to account for the fixed assets. No depreciation, rental or use allowance will be allowed on fully depreciated assets.
b. The use allowance method can be used on agencies that do not have adequate records to use depreciation but have a reasonable and justifiable estimate of acquisition cost. Use allowance for buildings and improvements is to be computed with an annual rate not to exceed 2% of acquisition cost. Use allowance for equipment is to be computed with an annual rate not to exceed 6 2/3% of acquisition cost.
When depreciation is used, adequate property records must be maintained reflecting acquisition costs, salvage value, estimated useful life, and acquisition date. Assets acquired in prior years must be depreciated from their acquisition date. Depreciation and use allowances must be allocated to all activities of an agency unless adequate justification can be given for another allocation method.
8. Dues and Subscriptions - which are related to trade, professional, business and technical organizations, and publications are allowable, provided the expenditure is not for membership in an organization which devotes a substantial part of its activities to influencing legislation.
9. Employee Morale, Health, and Welfare Costs - which are benefits to an agency's employees to improve working conditions, employer-employee relations, and/or employee morale and performance, such as vending machines, canteens, dormitory services, etc., are allowable after deduction of any revenue received from such activities and provided the net cost is reasonable.
10. Costs of interest are allowable to the extent that they are consistent with the provisions that follow:
a. General. Necessary and proper interest on both current and capital indebtedness is an allowable cost. Reasonable finance charges and service charges on indebtedness are includable in determining these costs. To be allowable, interest shall be:
1. Supported by evidence that funds were borrowed and that payment of interest and repayment of the funds were required.
2. Identifiable in the service provider's accounting records and reported in audited financial statements.
3. Related to the reporting period in which the costs are incurred.
4. Necessary and proper for the operation, maintenance, or acquisition of the service provider's program and/or facilities.
1. Necessary means that the interest be incurred on a loan made to satisfy a financial need of the service provider and for a purpose directly related to the provision of the services for which rates are established.
2. Proper means that the interest be incurred at a rate not in excess of what a prudent borrower would have had to pay in an arms-length transaction in capital markets when the loan was made.
b. Finance and service charges are those charges incurred by the lender related to the maintenance of records, collection of delinquent accounts, administration, etc., in addition to the charges for interest which a lending institution may include in the cost of a loan.
c. Interest expense shall be allocated to all activities in an equitable manner.
d. Limit on interest. Interest expense is allowable to the extent it does not exceed 3% of the total allowable operating costs (excluding interest) budgeted for the proposed rate year.
e. Provide a schedule giving a breakdown of interest expense to include the terms and purpose of the interest expense.
11. Insurance - required by the contract and any other insurance maintained by the agency in connection with the general conduct of business is allowable provided the extent of coverage, rates and premiums are reasonable under the circumstances.
12. Labor Relations Costs - incurred in maintaining satisfactory relations between agency and its employees, such as management committees, employee publications, etc., are allowable when distributed over all activities of the agency.
13. Maintenance and Repair Costs - necessary for the upkeep of property are allowable provided they do not add to the permanent value of the property or extend its useful life.
14. Materials Costs - cost of consumable supplies to carry out the contract objectives are allowable and may include materials related to transportation. Any refunds, rebates, discounts, etc. must be deducted from the cost. Net costs are allowable.
15. Meetings and Conference Costs - which include meals, transportation and facility rental costs incidental to meetings and conferences with the primary purpose of dissemination of technical information pertaining to contract objectives are allowable.
16. Overtime Pay - when necessary to cope with emergencies due to accidents, natural disasters or equipment breakdowns is allowable.
17. Patent and Copyright Costs - which are costs of preparing disclosures, reports and other documents required by the grant/contract are allowable. Costs incurred in filing a patent application or copyright where title is not conveyed to the government is unallowable.
18. Professional Service Costs - of a legal, accounting, scientific, social work, etc. nature not provided by employees of the agency when the costs are reasonable in light of the services rendered, and when the services rendered are required and are outside the ability of the agency personnel to perform, are allowable.
19. Publications and Printing Cost - materials for employee and consumer use and for reports to members and trustees and for taxing and regulatory bodies are allowable when allocated on an equitable basis over all agency activities.
20. Rearrangement and Alteration Costs - which are ordinary and normal are allowable when they are allocated on an equitable basis over all agency activities.
21. Recruitment Costs - not in excess of standard commercial employment agency rates are allowable when an agency maintains its own recruitment program, provided it is well managed. Operation of an employment office, operation of aptitude and educational testing programs, travel costs of employees engaged in recruitment, help wanted advertising, and reasonable travel costs of applicants are allowable when allocated on an equitable basis over all agency activities.
22. Relocation Costs - are allowable provided costs are in accordance with established policy consistently followed by the agency and do not exceed the employer's actual expenses, and do not apply to a move for less than 12 months, and provided that the following criteria are complied with:
a. Transportation of only the new employee, his immediate family, and household and personal effects to the new location is included.
b. Incidental costs incurred by the employee and his spouse in connection with acquiring a new home and lodging during the transition period does not extend to a period of more than 30 days.
c. Closing costs, brokerage fees, legal fees, appraisal fees, etc. incident to disposition of housing, does not exceed 8% of the sale price of the property, or cancellation of unexpired lease and disconnecting or reinstating household appliances and insurance against personal property damages in connection with relocation are allowable for existent employees but unallowable for newly recruited employees. Such items as loss on sale of a home, brokerage fees, legal fees, appraisal fees, etc. incidental to the acquisition of new housing are unallowable.
23. Rental Costs - for land, buildings, equipment, and other personal property are allowable if the rates are reasonable in light of such factors as rental costs of comparable facilities and market conditions in the area. Such costs must be allocated on an equitable basis over all agency activities.
24. Security Costs - including the cost of items such as uniforms, wages, and equipment of personnel engaged in providing necessary security for agency facilities are allowable when equitably allocated over all agency activities.
25. Severance Pay Cost - is allowable when required by law, employee/employer agreement, or established agency policy constituting an implied agreement.
26. Taxes - directly associated with the contract activities are allowable excluding any fines, penalties, or interest.
27. Training and Educational Costs - including on-the-job training and part-time undergraduate or post graduate college level education is allowable when it is related to the job requirements of the employee who is trained or educated. Allowable costs are those for training materials, textbooks, fees and tuition charged by the institution, and compensation of employees for time spent attending classes during working hours (not to exceed 156 hours per year) if classes are not taught after working hours.
28. Transportation Costs - inbound for freight, express, cartage and postage relating to purchased goods are allowable.
29. Travel Costs - including transportation, lodging, subsistence, and incidental expenses of travel incurred by agency personnel while on official business are allowable except that the difference between regular and first class air accommodations is unallowable.
Unallowable costs are as follows:
1. Bad Debts - including uncollectable amounts, claims, and related legal expenses, are unallowable.
2. Civil Defense Costs - including donations to civil defense projects and funds, are unallowable.
3. Contingencies - which are costs related to any possible future event or condition as yet indeterminable in amount. Contingency costs are unallowable.
4. Excess Facility Costs - that is, completely unused facilities in excess of the agencies current need, are unallowable.
5. Entertainment Costs - which are costs of amusements, diversion, social activities, ceremonials, and costs, relating thereto, such as meals, lodging, rentals, transportation, and gratuities are unallowable. This does not include recreational activities for employee morale or performance which are allowable. This also does not include costs of attending meetings and conferences where the primary purpose is the dissemination of technical information which are allowable.
6. Cost of Losses - on any grant/contract are unallowable for this application.
7. Organization Costs - which include incorporation fees, attorney fees, accountant fees, broker fees, organizer fees, and promoter fees in connection with organization or reorganization, are unallowable.
8. Profits and Losses on Disposition of Fixed Assets - however represented are unallowable.
9. Public Information Service Costs - which are for fund raising appeals are unallowable.
10. Publication and Printing Costs - including composition, printing, presswork, binding, promotion, mailing, and handling are unallowable for fund raising appeals.
Any other cost listed in the allowable column with conditional requirements which are not met are unallowable.
Particular items of cost not mentioned above may be determined allowable or unallowable based on the treatment provided for similar or related items of cost.
C. Included and Restricted Revenue
Your contract negotiator must balance the conservation of public funds with the equally important need of the applicant to produce an equitable return, whether for profit or for non-profit growth. In order to do this, the negotiator needs information concerning your revenue.
Application of applicable credits is described in federal regulations which provide that federal funds are available where the rate for services does not exceed a reasonable level which will assure quality of service. For this purpose, we require the applicant to identify revenue from all sources and this revenue shall be deducted from costs to establish a reasonable and competitive rate unless the revenue bears certain restrictions supported by documentation. These categories of restrictions allowed are as follows:
1. Production Revenue - that is revenue generated by the commercial/industrial operation of an organization. These funds should first be used to cover the commercial/industrial expenses of an organization. Any surplus production revenue is allocated at the organization's discretion.
2. Unallowable or Excluded Costs - that is, revenue which is restricted to be used in meeting costs which are excluded or unallowable in the budget forms in accordance with Section III, B, Allowable and Unallowable Budget Expenditures.
3. Fees for Service - that is, revenue which is restricted to being used to pay fees for unsponsored consumers. Revenue which is restricted to pay fees for unsponsored consumers must be traceable through the applicant's fiscal records to each individual consumer for whom a fee is paid. Any amount of funds used to pay a higher fee than that paid for the service through Purchase of Service must be used to defray the unit cost in the Purchase of Service rate negotiation, i.e., may not be shown as "Excluded and/or Unallowable" on the budget forms unless the vendor utilizes a fee scale and documents the fact that the amount in excess paid by some recipients is used to pay the balance due on lower scale recipients.
4. Endowment Contributions - that is, revenue which is restricted to placement into an endowment or trust fund, the principal of which is invested and not available to fund the applicant's operations (not to be confused with the income earned by investing the endowed principal which is unrestricted unless the applicant has a well documented policy of restricting such income).
All other revenue shall be considered general operating revenue and will be used to defray the cost of providing services. Such revenue shall be distributed over services in the ratio that each service's costs bear to the total costs of all service programs.
D. Definitions of Budget Categories
Following are definitions for the revenue and expense line items in Forms 7a-7d of the application:
Revenue Categories:
4000 - Contributions
Include only cash amounts for which the donor receives no direct private benefits. They are, therefore, to be carefully distinguished from membership dues and program service fees, which represent payments made in return for direct, private benefits.
All contributions received directly from individual donors and organizations and not resulting from a federated fund-raising campaign are to be included in this classification. Amounts paid ostensibly as memberships, but which are, in fact, contributions, should be included here; likewise, the excess amount paid over the regular membership fee should also be included here.
The following are examples of sources of support to be reported in this category:
Individuals, including an agency's own board members, employees and their acquaintances
Corporations and other businesses
Foundations and trusts
Contributions in response to door-to-door, mail, and other solicitations conducted by an agency itself
Fraternal, civic, social, and other unrelated groups (i.e., direct contributions, excluding contributions raised through organized campaigns)
Legacies and Bequests. In those cases where cash amounts received from one or more sources are significant in relation to the agency's total direct support, such amounts should be reported by source. Not to be included here, however, is support provided by governmental agencies or other support discussed below.
4200 - Special Events
The "Special Events" classification is provided to reflect support and incidental revenue derived from all of an organization's special fund-raising events during the period of the report. These are affairs in which something of value is offered directly to participants for (or in anticipation of) a payment and a contribution adequate to yield revenue for the sponsoring agency over the above direct costs and expenses. Dinners, dances, bazaars, card parties, fashion shows, and cookie, candy, and greeting card sales are examples of special fund-raising events. With the exception of special situations noted below, telethons and other forms of TV and radio entertainment are, as a rule, not considered "Special Events" for public reporting purposes. Contributions received in response to appeals of these types are to be reported as ordinary contributions; and expense attributable to the appeals, as fund-raising expenses.
4700 - Allocated by Federated Fund-Raising Organizations
All allocations, appropriations and other forms of financial support received or receivable from federated fund-raising organizations are to be reported in this classification, e.g., United Way of America.
4800 - Allocated by Unassociated and Non-Federated Fund-Raising Organizations
This category is provided for reporting support derived from fund-raising campaigns that is received from specialized fund-raising organizations that are not associated with "Federated Fund-Raising Organizations." It is to be used to report allocations to an agency which result from independent non-federated campaigns for multiple-agency support, e.g., those conducted by some large plants, by charity-support organizations within trade associations, by Easter Seals Society, or by March of Dimes. It is recommended that the specific sources be identified.
5500 - Grants from Governmental Agencies
All support and revenue that an agency received from governmental, federal, state, or local grants is to be reported in this classification. Governmental payments of service fees (third party payments) on behalf of individual consumers should not be included here. Fees for service from governmental agencies should be reported in category 6900 as a memo item. The sources and kinds of governmental grants should be identified.
6000 - Total Memberships Dues - Individuals
This caption is to be reserved for amounts received by an organization for personal memberships that procure directly for the member substantial, private benefits commensurate in value with the amount of the dues. Substantial direct, private benefits include the use of agency recreational, consulting and other facilities and services. The right to receive directly useful publications, or the enjoyment of a professional standing or other honor.
Voting rights alone are not sufficient to qualify a payment as a membership payment. Newsletters must, in many instances, be also rejected as an insufficient benefit to quality a payment as a membership. If a newsletter type publication has no other function than to keep a member informed of general activities of an organization, its direct usefulness to the recipient is highly questionable. "Contributing and sustaining" memberships implicitly require scrutiny for proper reporting. Their distinguishing titles require that there be an alternative, "regular" membership and imply a difference in rates is charged. If the regular membership in fact, qualifies as a "time" membership, as just defined and if the benefits offered for "Contributing" or sustaining membership are not in fact, greater corresponding to the difference in charge, then the difference between the charge collected and the rate for a regular membership properly belongs in "Contributions." In other words, this caption is intended to include payments for bona fide membership benefits only. When the benefits are not of a value reasonably related to the fee charged, the payment should be reported as "Contributions."
6400 - Total Sales To Public (On-Site/Off-Site)
Sales of any goods or services such as manufactured goods, packaging, janitorial services, lawn services, etc.
6500 - Total Investment Income
An organization may earn income from a variety of investments, from securities held for long-term investment or from short-term investments of temporarily idle cash to real estate and patents acquired through bequests and left unchanged for a period of years. Investment income may include interest, dividends, rentals, royalties, and even net earnings from activities, e.g., operation of an office building acquired through an endowment, conducted solely for the production of income.
6600 - Total Gain on Investment Transactions
This caption includes realized gains on investment transactions.
6700 - Other Revenue
This caption needs no explanation, but if the revenue of an agency has been properly classified, very little should usually remain to be shown as "Other Revenue."
Transactions that may be run through a "revolving" or "transitory items" account can generally be designed, as they occur, for specific revenue and expense accounts. Many are recognizable as involving funds belonging to someone other than the agency. Thus, Custodian Funds are in no sense revenue to the agency. They should not appear at all. Others represent expense reimbursements that can be credited at once to specific expense accounts. The more frequently "suspense," "revolving," "transitory," and similar catch-all accounts are used, and the longer they are left unattended, the more difficult it becomes to avoid accumulating unidentifiable entries and an undesirably large total of other revenue.
6900 - Total Program Service Fees - Memo only
This caption includes all fees paid by a third party either a governmental agency or private party on behalf of a specific individual consumer for service provided to that consumer. Grants expected from governmental agencies should not be included here but in caption 5000 - "Grants from Governmental Agencies." Also included in this caption is revenue received from participants in an agency's program, i.e., from the public at large. This classification includes fee payments received for any services furnished by the organization. Whether an agency uses schedules of fees for different services or merely requests consumers to pay what they feel they can afford, any payments solicited or suggested or accepted as a contribution in return for an agency's professional services belong in this classification. Some agencies account for fees by recording them at established standard rates for services rendered, then apply "allowances" to reduce the standard to the amount actually charged in each case. Such agencies should report as "Total Program Service Fees" only the net actually charged.
Expense Categories
7000 - Employee Compensation and Related Expenses
7001 - Salaries
This expense account group is reserved for salaries and wages earned by an agency's regular employees (full or part-time) including production workers with disabilities and consumers with disabilities and by temporary employees, including "Office Temporaries," other than consultants and individuals engaged on a fee basis. Salaries are compensation paid periodically for managerial, administrative, professional, clerical and other supportive services. Wages are compensation paid periodically on a piecework, hourly, daily or weekly basis for manual labor, skilled or unskilled, or a fixed sum for a certain amount of such labor.
7002 - Employer's Share of Employee Fringe Benefits and Taxes
This expense account is reserved for amounts paid and accrued by an agency under its own or other (private) employee health and retirement benefit plans, including voluntary employee termination or retirement payments outside a formal plan and includes the agency's portion of the cost of premiums for accident insurance policies, or the agency's contribution required under a private funding plan; the agency's portion of the cost of premiums for life insurance policies, or the agency's contribution required under a private funding plan; the agency's portion of the cost of premiums for medical and hospital plan insurance policies, or the agency's contribution required under a private funding plan; the agency's portion of the cost of premiums for pension and retirement annuity insurance policies, or the agency's contribution required under a private funding plan; the amounts to pensioned employees as total or supplemental pension payments, paid after the employee has retired. No amounts should be included in this account for part-time or occasional services rendered by a retired employee; the cost of periodic payments (specified period, contingent or in perpetuity) made to any annuitant under an annuity agreement or contract. An annuity is a series of equal payments, at fixed intervals; the donor's right to receive such payment; and the donee's obligation to pay such payments. An annuity agreement is an agreement wherein money or other property is made available to another on condition that the recipient bind himself or herself to hold and administer the property and to pay the donor or other designated person a stipulated annuity ceasing with a specified date, event, or in perpetuity; and amounts paid to employees who have been terminated or retired voluntarily. Only payments outside a formal plan are reported here. This expense account also includes expenses for social security taxes, and compensation insurance premiums, payable by employers under Federal, state or local laws and more specifically, includes the agency's portion of the FICA tax, based upon its employees' salaries and wages; the agency's cost of Federal or state unemployment insurance premiums, based on eligible employees' salaries and wages; the agency's cost of Workers' Compensation insurance premiums, based on eligible employees' salaries and wages; and the agency's cost of disability insurance premiums, based on eligible employees' salaries and wages. These premium payments may be either state or private insurance plans, or the agency's contribution under a private funding plan.
8000 - Professional Fees
This expense account group is reserved for fees and charges of professional practitioners, technical consultants, or semi-professional technicians, who are not employees of the agency and are engaged as independent contractors for specified services on a fee or other individual contract basis. However, amounts paid to mechanics, artisans, repairmen and others engaged in maintenance and repair services to an agency should not be included in this account, but in Accounts 8405, or 8502, or 8701; and fees paid for a consumer for direct personal services, other than those offered as part of the regular program services of an agency, should not be included in this group of accounts. Such fees should be included in the appropriate account within the category, Specific Assistance to Individuals - 8900.
8001 - Medical ∓ Dental Fees
This account is for fees to medical and/or dental specialists for consultation with, or instruction of, agency personnel, on special cases among its consumers, e.g., physical medicine, orthopedics, pediatrics, internal medicine, neurology, dentist, orthodontists, etc. (Note: This account should be distinguished from Account 8901. Fees charged to 8001 are for assistance to the agency itself, whereas fees charged to 8901 are payments on behalf of a particular consumer of an agency as a form of "Special Assistance to Individuals.")
8002 - Psychological Fees
This account is for fees to psychiatric/psychological specialists for consultation with, or instruction of agency personnel, or on specific cases among its consumers.
8003 - Legal Fees
This account is intended for fees to attorneys for consultation with, or instruction of, agency personnel on specific cases among its consumers. Also, fees for services rendered to the agency for interpretation and defense of its own legal rights and corporate entity.
8004 - Rehabilitation ∓ Education Fees
This account is for fees to professional or licensed specialists in the various disciplines comprising the fields of rehabilitation and education, for consultation with, or instruction of agency personnel or on specific cases among its consumers, e.g., physical therapy, speech therapy, vocational counseling and training, basic education, tutorial programs, special education, tuition, etc.
8005 - Audit, Accounting and Bookkeeping Fees
This account is for fees to certified public accountants and other independent public accountants for auditing the agency's books and for other consultation with, or instruction of, agency personnel on specific matters relating to agency accounting and financial reporting procedures. Included are fees for services rendered to the agency for periodic audit, supervision, or maintenance of the agency's financial records.
8006 - Other Purchased Services
This account is for fees to specialists in the development of an agency's financial resources and the interpretation and/or promotion of an agency's program service to its public, e.g., fund raising, bequests, campaigns, community relations, etc. (Note: The cost of purchase of space or time in the communication media should not be charged to this account, but to Account 8603). This account is also for fees to specialists rendering services to an agency in the areas of investment, real estate, or the collection of an agency's accounts, e.g., stock broker, real estate agents, collection agencies, and for fees to employment agencies incurred by an agency in the employment of agency staff. This account is also for fees to banks and service bureaus for processing records and transactions of an agency, e.g., charges for payroll processing, general ledger processing, etc.; and for fees to other independent professional consultants under contract, such as architects and engineers. Specify the nature of the consultants and consultation shown in this account. This account is also for the cost of fees, expenses or honoraria to professional entertainers for their services, such as the preparation of radio and TV spots, films, live entertainment, etc., e.g., actors, singers, comedians and other professional entertainers. (Note: The cost of purchase of space or time in communication media should not be charged to this account, but to Account 8603); and for the cost of other services purchased by the agency on a fee-for-service basis.
8100 - Supplies
This expense account group is reserved for the cost of materials, appliances, and other supplies used by an agency.
8101 - Educational and Vocational Training
This account is for the cost of materials and supplies purchased for educational and vocational training programs for consumers of the agency.
8102 - Food ∓ Beverages
This account is for the cost of food and beverages purchased for use in the food service function of the agency.
8103 - Laundry, Linen and Housekeeping
This account is for the cost of linen, uniforms, or other hygienic supplies and the costs of their cleaning and maintenance, as well as cooking and cleaning supplies used in the applicant agency. This is not to be confused with building and ground maintenance in which category would be listed, painting and repairs supplies and the like.
8104 - Office
This account is for the cost of various paper and other supplies used in the performance of the program or supporting services and for the cost of materials and supplies used in the publication, printing, or duplicating activities of an agency, e.g., ink, paper, toning fluid, etc.
8105 - Building and Grounds Maintenance
This account is for the cost of building and grounds maintenance supplies used by the agency in its day to day operation of such facilities for its program and support functions such as paint, plaster, fertilizer, and the like.
8106 - Raw Materials and Manufacturing
This account is for the cost of materials or goods purchased for use as an ingredient or component part of a finished product. These materials may be in their natural state and require further processing, before becoming a part of the finished product or a finished part which may be directly incorporated in the finished product, e.g., cloth, machine parts, lumber, electrical motors, etc. This account is also for the cost of supplies that can be directly identified with the manufacturing process, e.g., machining oils, small tools and minor equipment, cleaning rags, brushes, etc.
8107 - Recreational and Craft
This account is for the cost of materials and supplies purchased for recreational programs for consumers of the agency and for the cost of materials and supplies purchased for craft programs for consumers of the agency.
8108 - Other Supplies
This account is for the cost of medicines and drugs purchased generally for the use of employees or consumers of the agency, e.g., non-prescription drugs, etc. This account is also for the cost of prosthetic appliances and devices purchased for use in consumer training and instruction in clinic functions. This account is also for the cost of new merchandise in a completed condition, acquired for resale to the public in the furtherance of the agency's program services, and for the cost of supplies which do not fit into categories 8101-8108. Specify the nature of all supplies included.
8200 - Communications
This expense account group is reserved for the cost of business communications related to the provision of services.
8201 - Telephone and Telegraph
This expense account is reserved for the cost of all telephone, telegraph, mailgram, teleprocessing, and similar communication expenses.
8202 - Postage and Shipping
This expense account is reserved for the cost of postage, parcel post, commercial trucking and other delivery expenses such as shipping and shipping materials, incurred in the operations of the agency and, more specifically includes the cost of postage and parcel post used in the general administration of a program or supporting function of any agency; the cost of transportation charges incurred in the delivery of purchased materials and supplies used by the agency; and the cost of transportation charges incurred in the delivery of merchandise, services or products to a customer or others, using a messenger or outside delivery Service.
8400 - Occupancy
This expense account group is reserved for all costs arising from an agency's occupancy and use of owned or leased land, buildings, and offices. This would exclude costs reportable elsewhere, e.g., salaries, depreciation on buildings, acquisition of equipment and other assets, maintenance supplies, etc.
8401 - Rent
This account is for the rental of buildings and grounds space used by an agency in conducting its program and support functions and for the cost of compensation for the use of parking facilities. A copy of the original lease agreement and any subsequent changes to the lease agreement shall be provided. Related party rent for buildings is allowable only to the extent that the rent does not exceed the expenses that would be incurred had legal title been retained to the buildings by the agency.
8402 - Building and Building Equipment Insurance (General ∓ Liability)
This account is for the cost of premiums of insurance contracts to reimburse the agency for revenue or property loss. Examples of insurance coverage include: fire, theft, boilers, and elevator.
8403 - Mortgage Interest
This account is for the cost of interest paid for the use of money, through a lien on land, buildings, and/or equipment.
8404 - Utilities
This account is for the cost of occupancy related electric power, gas, heating oil, coal, water, and sewage used in the operation of the agency and its services.
8405 - Janitorial and Other Maintenance Services
This account is for the cost of maintenance services provided by non-employees, e.g., plumbers, electricians, roofers, masons, typewriter repairmen, appliance repairmen, etc. (Note that salaries of janitors and maintenance staff would not be reported here, but in Account 7000).
8406 - Real Estate and Personal Property Taxes
This account is for the cost of real estate taxes assessed against an agency for real estate used in the operation of the agency or real estate held by an agency for investment or rental income. Included in this account are assessments for street cleaning, snow removal or sidewalk plowing. This account is also for the cost of personal property taxes assessed against eligible assets of an agency.
8407 - Miscellaneous Occupancy Costs
This account is for the cost of any license or permit (other than automotive) that is related to the occupancy of the premises and is required by some regulatory body, of the corporation itself, or of staff or other agents of the organization, to engage in the lawful activities of the agency.
This account is for the cost of any other miscellaneous building occupancy expense that cannot be reported and classified under the account classifications 8401-8406. An example would be that of the cost of moving the agency from one location to another.
8500 - Rental and Maintenance of Equipment
This expense account group is reserved for the costs to the agency for rental and maintenance of various equipment, such as computers, typewriters, calculators, dictaphones, etc., used by the agency in conducting its program and/or support functions.
8501 - Equipment Rental
This account is for all costs to the agency arising from rental of equipment used by the agency in conducting its program and/or support functions. Rental costs in lease back and lease purchase agreements or related party rentals are only allowable to the extent that the rent does not exceed the expenses that would be incurred had legal title to the equipment been retained by the service provider.
8502 - Equipment Maintenance
This account is for all costs to the agency arising from maintenance of equipment used by the agency in conducting its program and/or support functions.
8600 - Printing and Publications
This expense account group is reserved for the costs of printing charges of commercial artists and suppliers for plates, artwork, proofs, photographs, and other costs of reports, leaflets, films, and other informational materials. Also included in this classification are costs of purchased publications, technical journals, books, pamphlets, and monographs.
8601 - Printing
This account is for the cost of contract printing.
8602 - Subscriptions and Purchase of Periodicals ∓ Other Publications
This account is for the cost of subscriptions, reference and resource publications purchased by the reporting agency for use of its staff, or for loan use by others (e.g., through inter-library loans), but not for distribution. This account is also for the cost of purchase of various publications essential to the agency and its staff in conducting its program and/or support functions.
8603 - Other Printing and Publications
This account is for the cost of contract artwork, contract photography, charges made by recording studios, and charges made by film studios for the preparation of an agency's materials; for the cost of advertising in newspapers and magazines, on radio, or television or other public media; and for the cost of printing, publications, and the like which do not fit into categories 8600-8602. Specify the nature of the other expenses included.
8700 - Travel
This expense account group is reserved for expenses of travel and transportation of staff and volunteers of the reporting agency.
8701 - Maintenance and Repairs-Company Vehicles
This account is for the cost of gasoline, oil, tires, batteries, and other consumable products used in an agency's owned or leased vehicles in the operation of an agency, and for the cost of parts purchased for, or contract repair services used on, agency-owned or leased vehicles, used in the operation of the agency.
8702 - Insurance-Company Vehicles
This account is for the cost of premiums of comprehensive insurance contracts, providing coverage for all phases of automotive insurance, for agency-owned or leased vehicles, used in the operation of the agency.
8703 - Leasing Costs-Vehicles
This account is for the cost of hourly, daily, weekly, monthly or annual lease fees for vehicles used in the operation of the agency. Leasing costs for lease back and lease purchase agreements or related party rentals are only allowable to the extent that the lease amount does not exceed the expense that would be incurred had legal title to the vehicle been retained by the service provider.
8704 - Auto Allowances-Employees and Volunteers on Business
This account is for the cost of reimbursements for mileage allowances, actual expenditures, parking fees, and other related expenses to employees and volunteers for the use of their private vehicles in the operation of the agency.
8705 - Hotel, Meals, Commercial Fares, and Incidental Expenses
This account is for the cost of hotels, meals and other expenses incidental to, and directly connected with, the travel and transportation of agency staff and volunteers, and for the cost of fares charged by licensed public transportation companies, including taxi.
8706 - Other Travel
This account is for the cost of all licenses or permits, local, state or Federal, required for the operation of agency vehicles used in the operation of the agency, and for the cost of travel which does not fit into categories 8701-8705. Specify the nature of other travel expenses.
8800 - Total Conferences, Conventions, Meetings
This account is for costs associated with the attendance at conferences, conventions, and meetings e.g., registration, travel, meals, etc.; and costs associated with the conduct of conferences, conventions, and meetings sponsored and paid for by the agency which may include the cost of rents or fees charged for the use of meeting rooms or equipment, e.g., tables, chairs, projectors, screens, etc.; the cost of meeting supplies and other related costs, e.g., programs, notices, badges, prizes, etc.; the cost of food and beverages provided as an integral part of the function; and the cost of amounts paid to speakers, lecturers, commentators, honorarium, and expenses for participation in meetings, seminars, workshops, conferences or conventions sponsored by the agency itself or its share of inter-agency support.
8900 - Specific Assistance to Individuals
This expense account group is reserved for the cost to the provider agency of specific materials, services, and any other assistance rendered by individuals or agencies other than agency staff, purchased at the expense of the agency, for a particular consumer.
8903 - Transportation Service
This account is for the cost, in whole or in part, of transporting a particular consumer, from one place to another for any purpose, e.g., training, entertainment, examination, employment, etc.
8904 - Wage Supplements
This account is for the cost of any moneys paid to an individual consumer which is not for services performed or related to paid work activities.
8906 - Testing Fees
This account is for the cost of tests, testing technicians, testing fees, test analysis, purchased in whole or in part, for a particular consumer or patient for his individual needs.
8907 - Other Specific Assistance
This account is for the cost of recreational and cultural activities, purchased in whole or in part, either on an individual or group basis, for the benefit of a particular consumer of the agency, e.g., individual camperships. This account is also for the cost of material, e.g., furniture, tools, craft supplies, production materials, etc., purchased in whole or in part, for a particular consumer for his or her individual use. This account is also for the cost of specific assistance to individuals which does not fit into categories 8901-8906.
9000 - Total Membership Dues
This expense account group is reserved for the cost of expenses for bona fide memberships in other organizations which provide, benefits such as regular services, publications, materials, etc. This account is both for the cost of dues for individual membership of staff members in other organizations relevant to the functions of the agency and for the cost of bona fide memberships acquired by the agency in other organizations having legitimate interest and activities in the promotion, provision, or planning of human service programs.
9400 - Interest (Non-Mortgage)
This account is for the cost of all non-mortgage interest to be paid during the budget period shown (regardless of when the loan was taken or what use was made of the principal). Mortgage interest is shown under category 8403.
9500 - Depreciation or Amortization
This expense account group is reserved for the allocation of the cost, or other carrying value, of physical assets (fixed assets) over their estimated useful life. The provision for depreciation or use allowances spreads the cost of such assets over the period of time their use benefits the program and/or support functions of the agency.
9501 - Depreciation-Equipment
This account is for depreciation expenses or use allowances of all equipment-except automotive-valued at $500 or more used by the agency during the budget period.
9502 - Amortization-Leasehold Improvement
This account is for the depreciation expenses or use allowances for improvements made to leaseholds used in the operation of the agency during the budget period.
9503 - Depreciation-Automotive Equipment
This account is for the cost of depreciation expenses or use allowances of automotive equipment used by the agency during the budget period.
9504 - Depreciation-Buildings
This account is for the cost of depreciation expenses or use allowances of buildings used by the agency for conducting its activities during the budget period.
9505 - Other Depreciation or Amortization
This account is for the cost of depreciation expenses or use allowances which does not fit into categories 9501-9504. Specify the nature of the depreciation expense or use allowance shown.
9600 - Other Expenses
9601-9604
This expense account group accumulates all other expenses of the agency. Specify the nature of the line item entries.
IV. FORMS INSTRUCTIONS
1. Write the full legal name of the provider on the applicant line.
2. On the proposed budget line put the dates for the provider's next fiscal year.
3. Put a check mark as to whether a form or document is included or not.
4. An authorized representative of the provider must sign and date the certification at the bottom of the form.
INSTRUCTIONS FOR FORM 2
PROVIDER DEMOGRAPHIC SHEET
1. Write the legal name of the provider.
2. Give your federal employer's tax I. D. number and attach your latest IRS form 990. Form 990 is the tax form an agency would submit to the Internal Revenue Service each year, if required. (Some agencies are exempt from filing this form).
3. Enter the name and address of the person(s) who owns the provider. In the case of a corporation enter the name and address of the board chairperson.
4. Enter the address where business mail should be sent.
5. Enter all addresses at which the applicant will provide service. These addresses must indicate geographic locations and may not be post office boxes.
6. Check the appropriate category.
7. Indicate if this provider is approved to accept Medicaid reimbursement for Medicaid eligible consumers. If so, give information concerning the rates and services approved.
8. List and enclose copies of all current licenses/certificates now held i.e., DOL, etc. Also, specify the date of approval and the expiration date of the license/certifications. Include copies of any quality assessments which may have been made on the provider.
9. Specify what, if any, National Standards are met by the applicant agency. For example: CARF. Service specific standards met may be listed on Form 3, Number 3.
10. Enter the beginning and ending dates for the three time periods specified. These periods should match the service provider's fiscal year. These time periods will remain the same throughout this application. The Proposed budget dates will be entered at the top of each form with the applicant's name in case the forms get separated. The "Prior Year" is the last fully completed fiscal year. The "Current Year" is the fiscal year now in effect. The "Proposed Budget" is the fiscal year for which approval and a negotiated rate are being requested.
11. List the cities and counties and their corresponding FIPS codes for the areas your program serves.
12. List the local DRS offices to whom you vend services.
INSTRUCTIONS FOR FORM 3
SERVICE DESCRIPTION
Before completing Form 3 the applicant must decide which of its services are purchasable. Those services which are purchasable are defined in Section II of this package, "Definitions of Purchasable Services." The applicant's services should be separated in accordance with the services defined in Section II and should be no less discrete than the services defined there.
The applicant will be required to have a current curriculum on file for each service to be sold. The curriculum written for each service should distinguish it from all others and should not repeat what is already stated in Section II, "Definitions of Purchasable Services."
A separate Form 3 must be completed for each service. A Form 3 must be completed for each service for sale as well as one for each service which is not for sale so that the complete set of these forms will show all services provided by the applicant. For services for which rates are not requested indicate "Not for Sale" in Item 2.
1. For services which are for sale write the service name exactly as it is written in Section II of this Package, "Definitions of Purchasable Services." Follow the service name with a slash and the name of the component or a more specific service name or both as needed (especially when two rates are being negotiated for the same service). In order for a service to be purchasable through Purchase of Service it must be listed in Section II of this Package as a purchasable service.
2. Check whether the curriculum on file with DRS is current, a revised curriculum is attached, or state the service is not for sale.
3. Show all national and State service specific standards met by the service, the certifying body for each, and the last date of certification for each.
4. State other agencies for whom this service is approved for purchase and state the approved rate.
5. Write the unit by which the service will be sold. The unit should be written exactly as shown and may cover the following:
Day One-Way Trip Hour
Round Trip
6. Once the unit has been determined, a definition of the unit must be established. For example, a day of extended employment is six hours.
7. Enter the total number of days that the service will be offered during the proposed period. Service may not be billed for more days than specified here. This number should include days that the vendor may be closed for weather related reasons.
8. Based on the defined units of service use one of the following sets of instructions to complete item 8:
A. UNIT = CONSUMER ATTENDANCE
1. Enter the maximum number of consumers that could be served.
2. Enter the average number of consumers that were enrolled or are proposed to be enrolled in the service for the specified time period.
3. Divide line 2 by line 1 and then multiply by 100.
4. Enter the average number of consumers who did attend or are expected to attend.
5. Divide line 4 by line 2 and then multiply by 100.
B. UNIT = HOUR OF STAFF TIME
1. Enter the total number of staff hours that were or are proposed to be available to provide direct service.
2. Enter the total number of service hours that were or are proposed to be provided for the specified time period.
3. Divide line 2 by line 1 and then multiply by 100
4. For individual supported employment, ignore 1-3 above and use no less than 1196 hours per 40 hour/week FTE job coach.
5. Enter "NA".
9. The explanation of how this entry was derived must be such that the negotiator can fully understand the method used by the applicant to project the number of units to be provided. An additional sheet of paper may be attached and referenced if needed.
10. Enter the number of service units that will be paid for by the Department of Rehabilitative Services, Community Services Boards, Department of Social Services/Welfare, private pay, school boards and other. In addition, enter the number of unsponsored service units for which you will receive no fees.
INSTRUCTIONS FOR FORMS 4a and 4b
FORM 4a
EMPLOYEE COMPENSATION
COLUMN:
1. List each employee by name and position.
2. Enter each employee's qualifications, e.g., degrees, courses, experience, etc. This information is important so use as many lines as needed or enclose an attachment stating this information on each employee. Include all consumers with disabilities who receive wages on one line.
3. Enter the number of hours per week that each employee works.
4. Enter proposed budget gross salary for the proposed budget period.
5. Enter the employer's share of taxes and fringe benefits i.e., FICA, health insurance, etc.
6. Enter the sum of columns 4 and 5.
FORM 4b
SERVICES
Single service agencies need not complete this section. Multi-service agencies write the names of the services provided by the applicant and Production, if applicable, at the top of columns A through F. In the "% of time " (a) column enter the percent of the employee or group's time that is spent related to the provision of the service named at the top of the column. Multiply the percentage times the column 6 entry and enter the result in the "Portion of Salary" column. For agencies that do not have a method for directly allocating those costs that are shared between services and production a "Mixed Costs" column may be used. Total the service columns and transfer the totals to Form 8, budget number 7000 distributed by Service.
The percentage of time for administrative salaries and other salaries not directly related to specific services may be a judgmental determination as to the portion of each of these salaries to be applied to each specific service. When a reasonable percentage of time is devised then this percentage of time should be consistently applied from one year to the next.
At the bottom of each column give the ratio of direct service FTEs to consumers. Calculate this ratio by dividing the number of direct service FTEs into the number of consumers.
NOTE - FORMS 4a ∓ 4b SHOULD BE ATTACHED SIDE BY SIDE TO FORM A SPREADSHEET FOR MULTI-SERVICE AGENCIES.
INSTRUCTIONS FOR FORM 5
DEPRECIABLE ASSETS
This form is to be completed only in cases where depreciation is used in the normal
operating process of the agency and proper records are maintained to account for assets.
The following instructions for the preparation of Form 5 are based on the straight line
method of depreciation which charges equal amounts each year over the service life of the
asset. Other methods of depreciation approved by the Internal Revenue Service are
acceptable provided the method and rates are identified. If another method is used note at
the bottom of the page the method used and show the computation of the depreciation rate.
Instructions for Column:
1. Enter the Budget Account Number to be charged from the Budget Form 7d
(Code 9500) for each item to be depreciated, i.e., 9501 - Equipment, 9503 - Automotive
Equipment, etc.).
2. Describe the object to be depreciated with information to distinguish
it from other similar objects. "Equipment" or "Furniture" is not enough
information to be able to track the object.
3. List the assets in order of the acquisition date from oldest to most
recent. This column should reflect the month and year in which the applicant purchased the
asset.
4. Acquisition cost is the original price less trade-in allowances or
discounts offered at time of purchase.
5. Show the amount paid by the Dept. of Rehabilitative Services if this
object was purchased through an Economic Development Fund grant (EDF) or an Establishment
grant.
6. Estimated salvage value is the reasonably expected value at the time
of disposition (as a trade-in, as sold for scrap, as sold as a used item, etc.).
7. This column reflects the amount allowable as depreciation during the
useful life of the item. Subtract the sum of Columns 5 (EDF) and 6 (Estimated salvage
value) from Column 4 (Acquisition Cost) to determine this amount.
8. Service Life In Years is the number of years that the depreciable
asset is expected to be useful to the applicant.
9. Depreciation Expense is the proposed expense of depreciating assets
on hand for the new budget and is computed as follows by the straight line method for an
asset in use for a period of:
An entire year: Depreciable Cost (Column 7) is divided by Service Life In Years (Column 8)
to give Depreciation Expense (Column 9).
Example:
A $32,000 asset with an Estimated Salvage Value of $2,000 and a Service Life of 25 years
is on hand at the beginning of the budget year and expected to be used the entire year:
For less than or a portion of a year: Depreciation Expenses are computed for a year as
above and divided by 12 (months) to get monthly depreciation which is then multiplied by
the number of months the asset will be in operation to obtain Depreciation Expense to be
used (Column 9).
Example:
The example is the same as that for a full year except that the asset will be
disposed of three months after the start of the budget year:
10. This is an accumulated total amount of depreciation which has
accrued on the object over the life time use of the object. The through date listed should
be that date at which the depreciation tables stop the most recent fiscal year and begin
the next fiscal year.
INSTRUCTIONS FOR FORM 6
RESTRICTED FUNDS
If the agency expects restricted revenue, then fill in the requested information using as many forms as needed. Disregard the form if no restricted funds are expected.
In Sections A., B., C., etc., write the name(s) of the person or agency from which the funds will be obtained. Also, write the names of the grant, donation, etc., if applicable. At the end of the line, enter the amount of funds expected.
1. Write a full description of the restriction which will be placed on the funds.
2. Write the name of the person or agency which will place the restriction on the funds.
3. Enter the amount of time which has elapsed since the restriction was first placed on the funds described and the beginning date of the Proposed Budget period (see form 2, number 11).
4. Enter the date upon which the expected funds may first be used.
5. Answer the question and if the answer is "yes" indicate where the earnings are shown in the Proposed Budget, Form 7a and how the earnings are to be used, if they are restricted. If the answer is "no," explain.
6. Check one box to indicate whether documentation of the restriction by the source of these funds is attached or will be maintained by the applicant for inspection. If the applicant will maintain documentation, tell exactly where it will be maintained. Documentation means a grant, letter of agreement, contract, excerpt from the applicant's board minutes, or the like.
INSTRUCTIONS FOR FORM 7 (A THROUGH D)
REVENUES AND EXPENSES
REVENUE (Form 7a):
COLUMN:
1. Reflect all restricted and unrestricted revenue received by individual line item for the prior year. These figures should match the independent audit.
2. Determine the actual revenue received up to the date this application is prepared and estimate the amount of revenue to be received for the remainder of the year. Add these amounts together by individual line item and insert the total in this column.
3. Reflect all revenue by individual line item which is expected to be received during the budget period to be negotiated.
4. This column is to be used for any revenue restricted from operations in accordance with Section III C.
5. Reflect the "Proposed Budget" amounts less the restricted from operations amounts. These amounts are carried over to Form 8, column 1, Revenue (4000-6700). DO NOT CARRY OVER PROGRAM SERVICE FEES FROM 6900 TO FORM 8.
EXPENSES (Forms 7b, 7c, and 7d):
COLUMN:
1. Reflect actual expenses incurred, by line item, for the prior year. These figures should match the independent audit.
2. Determine the actual expenses incurred up to the date this application is prepared and estimate the amount of expenses to be incurred for the remainder of the year. Add these two amounts together by individual line item and insert the total in this column.
3. Reflect all expenses by individual line item that you expect to incur during the budget period to be negotiated.
4. This column should reflect any expenses that are listed as Unallowable in Section III B.
5. This column should reflect the "Proposed Budget" amounts less the Excluded and/or Unallowable amounts.
INSTRUCTIONS FOR FORM 8
BUDGET ALLOCATIONS
This form is used to illustrate
Non-fee Revenues (from Form 7a - Column 5) available to off-set operational expenses;
distribution of Restricted Revenues into multiple services; and
the distribution of Expenses across multiple service programs.
Do not allocate any Program Service Fees (bottom section of Form 7a) on this form.
If the applicant is a multi-service agency, Columns A-E should be labeled consistently with those on Form 4b. Single-service agencies may omit this form and go directly to Form 9-SS (Service Unit Costs for Single Service Providers).
To complete the NON-FEE UNRESTRICTED REVENUES (4000 - 6700) section:
In Column 1 "Revised Budget," copy the subtotals of each Revenue grouping from Column 5 of Form 7a.
Add Column 1 figures down to reach the TOTAL NON-FEE UNRESTRICTED REVENUE figure. This amount should match the sum of Column 5 of Form 7a named TOTAL NON-FEE REVENUE.
To complete the SERVICES section:
Using the Restricted Funds identified in Form 6 and detailed in Column 4 of Form 7a, distribute the "restricted" funds to those service programs or Production columns for which they are being set aside.
Do not allocate any unrestricted funds in this section.
After distributing the restricted funding into the correct column, add down each column (A through F) separately to get a subtotal at the bottom (just above the heavy line).
Then add those subtotals from right to left to derive the TOTAL RESTRICTED REVENUE. (Place total under shaded column.) You are done here. This figure should match TOTAL RESTRICTED FUNDS on Form 6 and Line 6700, Column 4 - Form 7a.
To complete the EXPENSES - (7000 - 9600) section:
Line 7000:
Carry over the total personnel expense from Form 4a - Column 6 and place it in the Total Exp. column. (This should match TOTAL EMPLOYEE COMPENSATION AND RELATED EXPENSES - 7000 found on Form 7b, Column 5 as well.)
Assign the personnel costs of each program listed on Form 4b to their respective columns (A-F) on Form 8. These amounts are based on staffing expenses of each service program. Do not mix these costs, e.g., production staffing costs may not be redistributed to Supported Employment or Enclave programs.
Lines 8000 - 9600
Other discrete operating expenses must be allocated to the appropriate services or production. For example, raw materials and consumer wages should go to production. However, rent and utilities would go to the various services and production (mixed costs).
MIXED COSTS
For those facility-based service providers who do not have an allocation plan to directly allocate all expenses, the following procedures for mixed costs should be used:
1. Head the last two columns on Form 8 as "Mixed Costs" and "Production." Mixed Costs means costs allocable to Production as well as to one or more of the services. Costs allocable to several services, but not to production are not Mixed Costs for this purpose and should be divided into the respective programs by another formula.
2. Place the pure (unmixed) costs of services including Production in their appropriate columns. For instance, the costs of owning and operating a truck would ordinarily be shown in the Production column (not Transportation) because it would be used to haul materials, not consumers. Likewise a bag sealing machine's costs and the costs of a production manager's position would be pure costs of Production while the costs of a social worker position involved entirely in providing supportive services in Extended Employment would be a pure cost of that service component.
All costs that can be assigned as pure costs in some reasonable way should be so assigned. For instance, rent may be allocable by square footage when a particular area of the physical plant is used solely for Production and the remaining other areas are used for services.
3. Sum each of the columns and put their respective totals in the TOTAL EXPENSES line. Also, each line should add right to left to get the amount for the Total Exp. column.
4. To distribute the Mixed Costs
a. Calculate the Rate of Productivity, as the measured production of a sheltered employee expressed as a percentage of the production of an employee in a similar position in competitive (non-sheltered) industry. The vendor should determine the average rate of production of all sheltered employees during the preceding year. This percentage is arrived at by averaging the rates shown on the year's Department of Labor reports which the vendor is required to submit to the Department of Labor periodically. These reports show the productivity of each consumer involved in Production.
b. Multiply the average productivity rate (percentage) times the total of the Mixed Costs column.
c. Add that derived dollar amount to the Production column total for a grand total cost of Production activity. Production costs are the responsibility of the vendor and are not included in the rates. Note: This calculation and those done in 4 through 6 (below) should be shown on the back of Form 8 or on an attachment to the application.
Mixed costs that only belong to on-site programs should not be allocated to off-site programs.
d. Subtract the amount that was added to the Production column from the Mixed Cost column total. This remainder must now be distributed across the services columns in the same method that you distribute unrestricted revenue across services.
e. Calculate the percentage that each service represents of the total cost of all service columns (divide the subtotal by the TOTAL EXPENSE figure).
f. Multiply each respective percentage in turn times the remainder determined in 4 above and put the result on the Mixed Expenses line of that service column.
g. Add TOTAL EXPENSE to Mixed Expense to get the Sum of Expenses for that service.
5. Remember to subtract the mixed costs from itself in the Mixed Costs column so that your mathematical check will balance.
Proceed with the rest of the application as usual to derive unit costs for the services offered by the provider.
INSTRUCTIONS FOR FORM 9
SERVICE UNIT COSTS
This form is used to determine the cost per unit of providing each service which will serve as a beginning point for negotiations.
For Single Service Agencies (one rate covers all): Use the new Form 9-SS
To complete Line:
1. Insert the amount from Form 7d - TOTAL EXPENSES line - Column 5.
2. Leave blank.
3. Leave blank; 100% of your Allowable Expenses are already shown on line 1.
4. Insert the figure from Form 7a - Line 6800 - Column 3 (TOTAL NON-FEE REVENUE).
5. Insert the figure from Form 7a - Line 6800-Column 4 here. This is your Restricted Non-Fee Revenue (also detailed on Form 6).
6. Subtract Line 5 from Line 4; this should also correspond to the figure from Form 7a - Line 6800 - Column 5. (This is the TOTAL REVISED BUDGET amount.)
7. Skip this box.
8. Use the figure shown on Line 6.
9. Subtract Line 1 from Line 8.
10. Insert the units of service from Form 3 - #9.
11. Divide Line 9 (net expenses) by Line 10 (units) to get the calculated Unit Rate.
12. If you wish to request a rate LOWER than the calculated rate, this should be indicated here; you may not round up.
13. Insert Current rate for service.
14. Subtract Line 12 from Line 13 and divide that amount by the figure in Line 12 and multiply by 100.
For Multi-service Agencies: Use Form 9 with multiple columns
To complete Line:
1. Reiterate TOTAL EXPENSES from Form 8 under the proper column headings for each service. Keep production expenses in the last column.
2. Column 1 will be TOTAL EXPENSES minus Production Expenses; Columns A through D should be the same as on Line 1.
3. Find the percentage of each service of the TOTAL EXPENSES minus Production. In each column, divide the service expense by the amount in Line 2 - Column 1 and multiply by 100 to get a percentage (1 decimal place is accurate enough). These percentages should equal 100% and are shown in Column 1 of Line 3.
4. Insert the amount from Form 7a - Line 6800 - Column 3 (TOTAL NON-FEE REVENUE). (This amount is not shown on Form 8 but is the sum of the two totals in the upper grid.)
5. Insert TOTAL RESTRICTED REVENUE from Form 8; this amount is found under the shaded area of the SERVICES section and is the summation of the subtotals from each lettered column. (This amount should match the restricted revenue total found on Form 6 and again on Form 7a - Line 6800 - Column 4 (TOTAL NON-FEE REVENUE).)
Note: If you have received funding from DRS which is considered restricted and is assigned to 1 particular program, show that amount in the proper column on Line 5; it will be added later to your figures on Line 7.
6. In Column 1, subtract Line 5 from Line 4. This is your TOTAL UNRESTRICTED REVENUE. (This amount is also shown on Form 7a - Column 5 - TOTAL NON-FEE REVENUE and known as Revised Budget on Form 8 - Column 1 - top.)
7. To calculate, take the percentage shown for each respective column on Line 3 and multiply that by the Total Unrestricted Revenue on Line 6 - Column 1. Allocate these unrestricted revenues to each column.
Note: If there is not enough restricted revenue on Line 5 to cover production expenses on Line 1, use some of the unrestricted revenues to cover these expenses; then allocate the rest to the service cost centers. (You may elect to Restrict more revenue earlier to prevent this from occurring here but realize that you may be operating your production program in the red if your sales revenues are not covering your operating expenses.)
8. In each respective column, add the amount determined in Line 7 to any Restricted Revenue assigned to that service which originated from DRS funds. This does not occur often but these funds must be counted towards their appropriate services to eliminate being charged again for something DRS is sponsoring already.
9. Subtract Line 1 from Line 8; must be greater than zero.
NOTE: Do not enter an amount of unrestricted revenue for a service which, when added to the restricted revenue for that service, will yield a total revenue for that service greater than its expense listed on line 1. If this situation occurs, re-distribute the remaining unrestricted revenue (that would have caused the service to have a zero net expense) to the other remaining services.
10. Insert the units of service from Form 3 - #9.
11. In each lettered column, divide Line 9 (net expenses) by Line 10 (units) to get the Calculated Unit Rate.
12. If the service provider wishes to request a rate LOWER than the calculated rate, this should be indicated here; you may not round up.
13. Insert Current rate for each service.
14. Subtract Line 12 from Line 13 and divide that amount by the figure on Line 12 and multiply by 100.
INSTRUCTIONS FOR FORM 10
SERVICES UNIT COMPARISON
Prior year units actually delivered should be recorded by service. Documentation from the agency's records may be requested to verify the figures shown on this line.
Prior year units budgeted should come directly from the prior year Purchase of Service Vendor Application.
Differences of plus or minus 5% between actual units and budgeted units of service for the prior year should be explained.
Current year units actually delivered by service through the most current date that information is available.
Current year units estimated to be delivered from the date reflected on the line above through the end of the year.
Projected total units of service for the current year should be a total of the previous two lines, actual and estimated.
Current year units budgeted should come directly from the current year Purchase of Service Vendor Application.
Differences of plus or minus 5% between projected units and budgeted units of service for the current year should be explained.
If the agency has not been in existence long enough to have the information requested in the "Service Unit Comparison," leave the applicable lines blank and comment on the reason for deletions. If an agency has extended its rate for a year without submitting a budget, then service units from the last vendor application submitted should be used as budgeted units of service for comparative figures and all actual and projected amounts should be filled in.
