Circular No. A-87
PUBLIC ASSISTANCE COST ALLOCATION PLANS
TABLE OF CONTENTS
1. State public assistance agency
2. State public assistance agency costs
D. Submission, Documentation, and Approval of Public Assistance Cost Allocation Plans
E. Review of Implementation of Approved Plans
F. Unallowable Costs
A. General. Federally-financed programs administered by State public
assistance agencies are funded predominately by the Department of Health and
Human Services (HHS). In support of its stewardship requirements, HHS has
published requirements for the development, documentation, submission,
negotiation, and approval of public assistance cost allocation plans in Subpart
E of 45 CFR Part 95. All administrative costs (direct and indirect) are
normally charged to Federal awards by implementing the public assistance cost
allocation plan. This Attachment extends these requirements to all Federal
agencies whose programs are administered by a State public assistance agency.
Major federally-financed programs typically administered by State public
assistance agencies include: Aid to Families with Dependent Children,
Medicaid, Food Stamps, Child Support Enforcement, Adoption Assistance and
Foster Care, and Social Services Block Grant.
- "State public assistance agency" means a State agency administering or
supervising the administration of one or more public assistance programs
operated by the State as identified in Subpart E of 45 CFR Part 95. For the
purpose of this Attachment, these programs include all programs administered by
the State public assistance agency.
- "State public assistance agency costs" means all costs incurred by, or
allocable to, the State public assistance agency, except expenditures for
financial assistance, medical vendor payments, food stamps, and payments for
services and goods provided directly to program recipients.
C. Policy. State public assistance agencies will develop, document and
implement, and the Federal Government will review, negotiate, and approve,
public assistance cost allocation plans in accordance with Subpart E of 45 CFR
Part 95. The plan will include all programs administered by the State public
assistance agency. Where a letter of approval or disapproval is transmitted to
a State public assistance agency in accordance with Subpart E, the letter will
apply to all Federal agencies and programs. The remaining sections of this
Attachment (except for the requirement for certification) summarize the
provisions of Subpart E of 45 CFR Part 95.
D. Submission, Documentation, and Approval of Public Assistance Cost
- State public assistance agencies are required to promptly submit amendments
to the cost allocation plan to HHS for review and approval.
- Under the coordination process outlined in subsection E, affected Federal
agencies will review all new plans and plan amendments and provide comments, as
appropriate, to HHS. The effective date of the plan or plan amendment will be
the first day of the quarter following the submission of the plan or amendment,
unless another date is specifically approved by HHS. HHS, as the cognizant
agency acting on behalf of all affected Federal agencies, will, as necessary,
conduct negotiations with the State public assistance agency and will inform
the State agency of the action taken on the plan or plan amendment.
E. Review of Implementation of Approved Plans.
- Since public assistance cost allocation plans are of a narrative nature,
the review during the plan approval process consists of evaluating the
appropriateness of the proposed groupings of costs (cost centers) and the
related allocation bases. As such, the Federal Government needs some assurance
that the cost allocation plan has been implemented as approved. This is
accomplished by reviews by the funding agencies, single audits, or audits
conducted by the cognizant audit agency.
- Where inappropriate charges affecting more than one funding agency are
identified, the cognizant HHS cost negotiation office will be advised and will
take the lead in resolving the issue(s) as provided for in Subpart E of 45 CFR
- If a dispute arises in the negotiation of a plan or from a disallowance
involving two or more funding agencies, the dispute shall be resolved in
accordance with the appeals procedures set out in 45 CFR Part 75.
Disputes involving only one funding agency will be resolved in
accordance with the funding agency's appeal process.
- To the extent that problems are encountered among the Federal agencies
and/or governmental units in connection with the negotiation and approval
process, the Office of Management and Budget will lend assistance, as required,
to resolve such problems in a timely manner.
F. Unallowable Costs. Claims developed under approved cost allocation
plans will be based on allowable costs as identified in this Circular. Where
unallowable costs have been claimed and reimbursed, they will be refunded to
the program that reimbursed the unallowable cost using one of the following
methods: (a) a cash refund, (b) offset to a subsequent claim, or (c) credits
to the amounts charged to individual awards.