[Federal Register Volume 63, Number 71 (Tuesday, April 14, 1998)]
[Rules and Regulations]
[Pages 18135-18139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-9761]
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CORPORATION FOR NATIONAL AND COMMUNITY SERVICE
45 CFR Parts 2510, 2516, 2517, 2519, 2521, and 2540
Administrative Costs for Learn and Serve America and AmeriCorps
Grants Programs
AGENCY: Corporation for National and Community Service.
ACTION: Interim final rule.
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SUMMARY: The Corporation issues this interim final rule to amend
provisions relating to administrative costs in parts 2510, 2516, 2517,
2519, 2521, and 2540. For national service programs assisted by the
Corporation that are subject to a statutory limit on the percentage of
assistance that may be used to pay for administrative costs, the
interim final
[[Page 18136]]
rule clarifies the definition of administrative costs, adds an explicit
definition of program costs that are not subject to the limitation on
administrative costs, and provides additional guidelines for applying
the limitation on administrative costs.
DATES: This interim final rule is effective April 14, 1998. Written
comments must be received on or before June 15, 1998.
ADDRESSES: Comments may be mailed or delivered to Kenneth L. Klothen,
General Counsel, Corporation for National and Community Service, 1201
New York Avenue NW, Washington, D.C. 20525 or sent by facsimile
transmission to (202) 565-2796. Copies of all communications received
will be available for public inspection at the Corporation.
FOR FURTHER INFORMATION CONTACT: Michael Kenefick, Director of Grants
Management, Corporation for National and Community Service, (202) 606-
5000, ext. 101.
SUPPLEMENTARY INFORMATION:
Substantive Changes
Under the National and Community Service Act of 1990, as amended
(the Act), the Corporation for National and Community Service is
authorized to provide assistance to States and other eligible entities
to support national and community service programs. The Act provides
that not more than five percent of assistance for a fiscal year may be
used to pay for administrative costs in the following types of
programs: (1) School-based service-learning programs; (2) community-
based service-learning programs; (3) higher education innovative
programs for community service; and (4) national service programs
assisted under sections 121(a) and 121(b) of the Act through grants to
State Commissions, Indian Tribes, U.S. Territories, and national
nonprofit organizations.
The Act itself does not define ``administrative costs'' but directs
the Corporation to prescribe by rule the manner and extent to which
assistance provided may be used to pay for administrative costs and the
distribution of such costs between grantees and sub-grantees. Based on
issues raised in recent audits of several national service programs,
the Corporation has reviewed its regulations relating to administrative
costs and determined that a revision is desirable. Because programs
applying for assistance from the Corporation this year need to have
clear guidance as to the rules governing their awards, the Corporation
has determined that it would be contrary to the public interest to
publish this amendment as a proposed rule. Therefore the amendments are
made through an interim final rule that takes effect immediately.
The Corporation seeks to clarify what types of costs are considered
subject to the five percent limitation on administrative costs. The
interim final rule includes a more explicit itemization of costs that
are directly related to programs and projects, and therefore properly
excluded from the definition of administrative costs. The interim final
rule also provides guidelines for the implementation of the statutory
requirements, including the use of indirect cost rates and the use of
fixed rates for administrative costs.
Executive Order 12886
The Corporation has determined that this regulatory action is not a
``significant'' rule within the meaning of Executive Order 12866
because it is not likely to result in: (1) An annual effect on the
economy of $100 million or more, or an adverse and material effect on a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
government or communities; (2) the creation of a serious inconsistency
or interference with an action taken or planned by another agency; (3)
a material alteration in the budgetary impacts of entitlement, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or (4) the raising of novel legal or policy issues arising out
of legal mandates, the President's priorities, or the principles set
forth in Executive Order 12866.
Regulatory Flexibility Act
The Corporation has determined that this regulatory action will not
result in (1) an annual effect on the economy of $100 million or more;
(2) a major increase in costs or prices for consumers, individual
industries, Federal, State, or local government agencies, or geographic
regions; or (3) significant adverse effects on competition, employment,
investment, productivity, innovation, or on the ability of United
States-based enterprises to compete with foreign-based enterprises in
domestic and export markets. Therefore, the Corporation has not
performed the initial regulatory flexibility analysis that is required
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) for major
rules that are expected to have such results.
Other impact analyses
This regulatory action contains no information collection
requirements that are subject to review and approval under the
Paperwork Reduction Act of 1995 (44 U.S.C. 3500 et seq.).
For purposes of Title II of the Unfunded Mandates Reform Act of
1995, 2 U.S.C. 1531-1538, as well as Executive Order 12875, this
regulatory action does not contain any federal mandate that may result
in increased expenditures in either Federal, State, local, or tribal
governments in the aggregate, or impose an annual burden exceeding $100
million on the private sector.
List of Subjects
45 CFR Part 2510
Grant programs--social programs, Volunteers.
45 CFR Part 2516
Elementary and secondary education, Grant programs--social
programs, Indians, Nonprofit organizations, Reporting and recordkeeping
requirements, Volunteers.
45 CFR Part 2517
Community development, Grant programs--social programs, Nonprofit
organizations, Reporting and recordkeeping requirements, Volunteers.
45 CFR Part 2519
Colleges and universities, Grant programs--social programs,
Nonprofit organizations, Reporting and recordkeeping requirements,
Volunteers.
45 CFR Part 2521
AmeriCorps, Grant programs--social programs, Volunteers.
45 CFR Part 2540
Administrative practice and procedure, Grant programs--social
programs, Reporting and recordkeeping requirements, Volunteers.
Dated: April 8, 1998.
Kenneth L. Klothen,
General Counsel.
For the reasons stated in the preamble, parts 2510, 2516, 2517,
2519, and 2540 of chapter 25, title 45 of the Code of Federal
Regulations are amended to read as follows:
PART 2510--OVERALL PURPOSES AND DEFINITIONS
1. The authority citation for part 2510 continues to read as
follows:
Authority: 42 U.S.C. 12501 et seq.
[[Page 18137]]
2. In Sec. 2510.20, the definition of ``administrative costs'' is
revised and a new definition of ``program costs'' is added in
alphabetical order to read as follows:
Sec. 2510.20 Definitions
* * * * *
Administrative costs. The term administrative costs means general
or centralized expenses of overall administration of an organization
that receives assistance under the Act and does not include program
costs.
(1) For organizations that have an established indirect cost rate
for Federal awards, administrative costs mean those costs that are
included in the organization's indirect cost rate. Such costs are
generally identified with the organization's overall operation and are
further described in Office of Management and Budget Circulars A-21
(Cost Principles for Educational Institutions), A-87 (Cost Principles
for State, Local and Indian Tribal Governments), and A-122 (Cost
Principles for Nonprofit Organizations) that provide guidance on
indirect cost to Federal agencies. Copies of Office of Management and
Budget Circulars are available from the Executive Office of the
President, 725 17th Street, NW., room 2200, New Executive Office
Building, Washington, D.C. 20503. They may also be accessed on-line at:
http://www.whitehouse.gov/WH/EOP/OMB/grants/index.html.
(2) For organizations that do not have an established indirect cost
rate for Federal awards, administrative costs include:
(i) Costs for financial, accounting, auditing, contracting, or
general legal services except in unusual cases when they are
specifically approved in writing by the Corporation as program costs.
(ii) Costs for internal evaluation, including overall
organizational management improvement costs (except for independent
evaluations and internal evaluations of a program or project).
(iii) Costs for general liability insurance that protects the
organization(s) responsible for operating a program or project, other
than insurance costs solely attributable to a program or project.
* * * * *
Program costs. The term program costs means expenses directly
related to a program or project, including their operations and
objectives. Program costs include, but are not limited to:
(1) Costs attributable to participants, including: living
allowances, insurance payments, and expenses for training and travel.
(2) Costs (including salary, benefits, training, travel)
attributable to staff who recruit, train, place, support, coordinate,
or supervise participants, or who develop materials used in such
activities.
(3) Costs for independent evaluations and internal evaluations to
the extent that the evaluations cover only the funded program or
project.
(4) Costs, excluding those already covered in an organization's
indirect cost rate, attributable to staff that work in a direct program
or project support, operational, or oversight capacity, including, but
not limited to: support staff whose functions directly support program
or project activities; staff who coordinate and facilitate single or
multi-site program and project activities; and staff who review,
disseminate and implement Corporation guidance and policies directly
relating to a program or project.
(5) Space, facility, and communications costs for program or
project operations and other costs that primarily support program or
project operations, excluding those costs that are already covered by
an organization's indirect cost rate.
(6) Other allowable costs, excluding those costs that are already
covered by an organization's indirect cost rate, specifically approved
by the Corporation as directly attributable to a program or project.
* * * * *
PART 2516--SCHOOL-BASED SERVICE-LEARNING PROGRAMS
1. The authority citation for part 2516 continues to read as
follows:
Authority: 42 U.S.C. 12501 et seq.
Subpart G--Funding Requirements
2. Section 2516.710 is revised to read as follows:
Sec. 2516.710 Are there limits on the use of funds?
Yes. The following limits apply to funds available under this part:
(a) (1) Not more than five percent of the grant funds provided
under this part for any fiscal year may be used to pay for
administrative costs, as defined in Sec. 2510.20 of this chapter.
(2) The distribution of administrative costs between the grant and
any subgrant will be subject to the approval of the Corporation.
(3) In applying the limitation on administrative costs the
Corporation will approve one of the following methods in the award
document:
(i) Limit the amount or rate of indirect costs that may be paid
with Corporation funds under a grant or subgrant to five percent of
total Corporation funds expended, provided that--
(A) Organizations that have an established indirect cost rate for
Federal awards will be limited to this method; and
(B) Unreimbursed indirect costs may be applied to meeting
operational matching requirements under the Corporation's award;
(ii) Specify that a fixed rate of five percent or less (not subject
to supporting cost documentation) of total Corporation funds expended
may be used to pay for administrative costs, provided that the fixed
rate is in conjunction with an overall 15 percent administrative cost
factor to be used for organizations that do not have established
indirect cost rates; or
(iii) Utilize such other method that the Corporation determines in
writing is consistent with OMB guidance and other applicable
requirements, helps minimize the burden on grantees or subgrantees, and
is beneficial to grantees or subgrantees and the Federal Government.
(b) (1) An SEA or Indian tribe must spend between ten and 15
percent of the grant to build capacity through training, technical
assistance, curriculum development, and coordination activities.
(2) The Corporation may waive this requirement in order to permit
an SEA or a tribe to use between ten percent and 20 percent of the
grant funds to build capacity. To be eligible to receive the waiver,
the SEA or tribe must submit an application to the Corporation.
(c) Funds made available under this part may not be used to pay any
stipend, allowance, or other financial support to any participant in a
service-learning program under this part except reimbursement for
transportation, meals, and other reasonable out-of-pocket expenses
directly related to participation in a program assisted under this
part.
PART 2517--COMMUNITY-BASED SERVICE-LEARNING PROGRAMS
1. The authority citation for part 2517 continues to read as
follows:
Authority: 42 U.S.C. 12501 et seq.
Subpart G--Funding Requirements
2. Section 2517.710 is revised to read as follows:
Sec. 2517.710 Are there limits on the use of funds?
Yes. The following limits apply to funds available under this part:
[[Page 18138]]
(a) (1) Not more than five percent of the grant funds provided
under this part for any fiscal year may be used to pay for
administrative costs, as defined in Sec. 2510.20 of this chapter.
(2) The distribution of administrative costs between the grant and
any subgrant will be subject to the approval of the Corporation.
(3) In applying the limitation on administrative costs the
Corporation will approve one of the following methods in the award
document:
(i) Limit the amount or rate of indirect costs that may be paid
with Corporation funds under a grant or subgrant to five percent of
total Corporation funds expended, provided that--
(A) Organizations that have an established indirect cost rate for
Federal awards will be limited to this method; and
(B) Unreimbursed indirect costs may be applied to meeting
operational matching requirements under the Corporation's award;
(ii) Specify that a fixed rate of five percent or less (not subject
to supporting cost documentation) of total Corporation funds expended
may be used to pay for administrative costs, provided that the fixed
rate is in conjunction with an overall 15 percent administrative cost
factor to be used for organizations that do not have established
indirect cost rates; or
(iii) Utilize such other method that the Corporation determines in
writing is consistent with OMB guidance and other applicable
requirements, helps minimize the burden on grantees or subgrantees, and
is beneficial to grantees or subgrantees and the Federal Government.
(b) (1) An SEA or Indian tribe must spend between ten and 15
percent of the grant to build capacity through training, technical
assistance, curriculum development, and coordination activities.
(2) The Corporation may waive this requirement in order to permit
an SEA or a tribe to use between ten percent and 20 percent of the
grant funds to build capacity. To be eligible to receive the waiver,
the SEA or tribe must submit an application to the Corporation.
(c) Funds made available under this part may not be used to pay any
stipend, allowance, or other financial support to any participant in a
service-learning program under this part except reimbursement for
transportation, meals, and other reasonable out-of-pocket expenses
directly related to participation in a program assisted under this
part.
PART 2519--HIGHER EDUCATION INNOVATIVE PROGRAMS FOR COMMUNITY
SERVICE
1. The authority citation for part 2519 continues to read as
follows:
Authority: 42 U.S.C. 12501 et seq.
Subpart G--Funding Requirements
2. Section 2519.710 is revised to read as follows:
Sec. 2519.710 Are there limits on the use of funds?
Yes. The following limits apply to funds available under this part:
(a) (1) Not more than five percent of the grant funds provided
under this part for any fiscal year may be used to pay for
administrative costs, as defined in Sec. 2510.20 of this chapter.
(2) The distribution of administrative costs between the grant and
any subgrant will be subject to the approval of the Corporation.
(3) In applying the limitation on administrative costs the
Corporation will approve one of the following methods in the award
document:
(i) Limit the amount or rate of indirect costs that may be paid
with Corporation funds under a grant or subgrant to five percent of
total Corporation funds expended, provided that--
(A) Organizations that have an established indirect cost rate for
Federal awards will be limited to this method; and
(B) Unreimbursed indirect costs may be applied to meeting
operational matching requirements under the Corporation's award;
(ii) Specify that a fixed rate of five percent or less (not subject
to supporting cost documentation) of total Corporation funds expended
may be used to pay for administrative costs, provided that the fixed
rate is in conjunction with an overall 15 percent administrative cost
factor to be used for organizations that do not have established
indirect cost rates; or
(iii) Utilize such other method that the Corporation determines in
writing is consistent with OMB guidance and other applicable
requirements, helps minimize the burden on grantees or subgrantees, and
is beneficial to grantees or subgrantees and the Federal Government.
PART 2521--ELIGIBLE AMERICORPS PROGRAM APPLICANTS AND TYPES OF
GRANTS AVAILABLE FOR AWARD
1. The authority citation for part 2521 continues to read as
follows:
Authority: 42 U.S.C. 12501 et seq.
2. Section 2521.30(h) is revised to read as follows:
Sec. 2521.30 How will AmeriCorps program grants be awarded?
* * * * *
(h)(1) Not more than five percent of the grant funds provided under
this part for any fiscal year may be used to pay for administrative
costs, as defined in Sec. 2510.20 of this chapter.
(2) The distribution of administrative costs between the grant and
any subgrant will be subject to the approval of the Corporation.
(3) In applying the limitation on administrative costs the
Corporation will approve one of the following methods in the award
document:
(i) Limit the amount or rate of indirect costs that may be paid
with Corporation funds under a grant or subgrant to five percent of
total Corporation funds expended, provided that--
(A) Organizations that have an established indirect cost rate for
Federal awards will be limited to this method; and
(B) Unreimbursed indirect costs may be applied to meeting
operational matching requirements under the Corporation's award;
(ii) Specify that a fixed rate of five percent or less (not subject
to supporting cost documentation) of total Corporation funds expended
may be used to pay for administrative costs, provided that the fixed
rate is in conjunction with an overall 15 percent administrative cost
factor to be used for organizations that do not have established
indirect cost rates; or
(iii) Utilize such other method that the Corporation determines in
writing is consistent with OMB guidance and other applicable
requirements, helps minimize the burden on grantees or subgrantees, and
is beneficial to grantees or subgrantees and the Federal Government.
PART 2540--GENERAL ADMINISTRATIVE PROVISIONS
1. The authority citation for part 2540 continues to read as
follows:
Authority: 42 U.S.C. 12501 et seq.
Subpart A--Requirements Concerning the Distribution and Use of
Corporation Assistance
2. Section 2540.110 is revised to read as follows:
Sec. 2540.110 Limitation on use of Corporation funds for
administrative costs.
(a)(1) Not more than five percent of the grant funds provided under
45 CFR 2516, 2517, 2519, and 2521 for any
[[Page 18139]]
fiscal year may be used to pay for administrative costs, as defined in
Sec. 2510.20 of this chapter.
(2) The distribution of administrative costs between the grant and
any subgrant will be subject to the approval of the Corporation.
(3) In applying the limitation on administrative costs the
Corporation will approve one of the following methods in the award
document:
(i) Limit the amount or rate of indirect costs that may be paid
with Corporation funds under a grant or subgrant to five percent of
total Corporation funds expended, provided that--
(A) Organizations that have an established indirect cost rate for
Federal awards will be limited to this method; and
(B) Unreimbursed indirect costs may be applied to meeting
operational matching requirements under the Corporation's award;
(ii) Specify that a fixed rate of five percent or less (not subject
to supporting cost documentation) of total Corporation funds expended
may be used to pay for administrative costs, provided that the fixed
rate is in conjunction with an overall 15 percent administrative cost
factor to be used for organizations that do not have established
indirect cost rates; or
(iii) Utilize such other method that the Corporation determines in
writing is consistent with OMB guidance and other applicable
requirements, helps minimize the burden on grantees or subgrantees, and
is beneficial to grantees or subgrantees and the Federal Government.
(b) Costs attributable to administrative functions as well as
program functions should be prorated between administrative costs and
program costs.
[FR Doc. 98-9761 Filed 4-13-98; 8:45 am]
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