13 AAC 95.170 - Contractual costs

(a) The following costs related to operating the grant project are allowable:

(1) the cost of insurance premiums, including premiums for hazard insurance, malpractice insurance, and other liability insurance coverage for personnel, vehicles, and activities of the grant project;

(2) membership dues in professional organizations;

(3) bonding costs;

(4) the cost of an audit that complies with 2 AAC 45.010;

(5) the cost of advertising, printing, and public-awareness activities if the grantee assumes sole responsibility for the content of the communication;

(6) the cost of legal services;

(7) the cost of routine and ancillary medical services on either an inpatient or outpatient basis;

(8) registration fees and tuition for symposiums, conferences, training, and seminars;

(9) the cost of providing training services from persons other than employees;

(10) the cost of transporting equipment from one grantee to another;

(11) accounting fees;

(12) the cost of consultants as set out in 13 AAC 95.140;

(13) the cost of subscriptions to professional journals and materials;

(14) the cost of subcontracts that comply with 13 AAC 95.220.

(b) Subject to (c) - (h) of this section, a grantee may make a payment to a reserve fund established in accordance with (h) of this section to compensate for depreciation of, or as a use allowance for, an asset acquired by the grant project, including an asset donated to the grant project by the grantee or by a person other than the grantee, which is necessary for furtherance of the grant project. In computing the amount of payment under this subsection, the grantee may not include the cost of an asset, to the extent that the cost of the asset was paid for or donated to the grant project by the state or federal government, or the cost of land. However, the grantee may include in the computation the cost of capital improvements to land which are not included in the cost of a building if the grantee's books of account provide for the systematic amortization of the cost based on a reasonable determination of the probable useful life of the improvement and if the share of the cost allocated to the grant is developed from the amount amortized for the grant period involved.

(c) Normal depreciation on a grantee's plant, equipment, and other capital facilities is allowable under (b) of this section if the grantee computes the depreciation

(1) upon a property-cost basis that could be used by the grantee for federal income tax purposes, if the grantee were subject to the payment of federal income tax; and

(2) by the consistent application to the assets concerned of a generally accepted accounting method, subject to the limitations of 26 U.S.C. (the Internal Revenue Code of 1986).

(d) If the grantee uses the depreciation method for the purposes of (b) of this section, the grantee shall maintain adequate property records. The grantee shall determine the useful life for usable capital assets on a realistic basis that takes into consideration such factors as type of construction, nature of the equipment used, technological developments in the particular area, and the renewal and replacement policies followed by the grantee for the individual items or classes of assets involved. If, on a date later than the date of acquisition of an asset by the grant project, the grantee introduces the depreciation method for application to the asset, the payments under (b) of this section for the depreciation may not exceed the amounts that would have resulted had the depreciation method been in effect from the date of acquisition of the assets.

(e) A payment for depreciation of an asset that is fully depreciated is not allowed. However, the grantee may negotiate with the council to allow payments under (b) of this section for a reasonable use allowance for the asset. The council will, in its discretion, allow the payments if, after taking into consideration the cost of the asset involved, the estimated useful life remaining at the time of the negotiation, the actual replacement policy followed by the grantee in the light of service lives used for calculating depreciation, the effect of increased maintenance charges or decreased efficiency as a result of age, and other factors relating to the use of the asset for the purpose contemplated, the council determines that the payments are justifiable.

(f) If a grantee uses the use-allowance method for the purposes of (b) of this section, the grantee shall compute the use allowance for

(1) buildings and improvements at an annual rate not to exceed two percent of the acquisition cost of the buildings and improvements; and

(2) equipment at an annual rate not to exceed

(A) six and two-thirds percent of the acquisition cost of the equipment if the grantee maintains current records with respect to equipment on hand;

(B) 10 percent of the acquisition cost of the equipment if the grantee maintains records that reflect only the acquisition cost of original equipment of the grant project; or

(C) six and two-thirds percent of a reasonable estimate of the acquisition cost of the equipment if the grantee does not maintain equipment records described in (A) or (B) of this paragraph and if the grantee justifies the estimate to the satisfaction of the council.

(g) A grantee may not make a payment under (b) of this section as a use allowance for equipment if the equipment is not usable. In (f) of this section, "original equipment" means the equipment initially placed in a building to perform the functions currently being performed in the building; however, if a permanent change in the function of a building takes place, the grantee may make a redetermination of the original equipment.

(h) A grantee shall establish a reserve fund for replacement of capital assets of the grant project. A payment under (b) of this section must be made to the reserve fund established under this subsection.

(i) A grantee may pay tax expenses; however, these expenses may not include taxes from which the grantee is exempt.

Notes

13 AAC 95.170

Eff. 6/25/88, Register 106; am 7/1/95, Register 134

Authority:AS 18.66.050