WIA Title I-B Program Management Policies and procedures
Memorandum #05-18

To: All Subrecipients

Subject: Allowable Costs, Reasonable Costs, and Prior Approval

Effective Date: November 15 , 2005

A.    Background

In conformance with Washington State Policy Number 3260, Allowable Cost and Prior Approval Requirements, for Title I-B of the Workforce Investment Act, the Snohomish County Workforce Development Council ( WDC ) has developed this policy for allowable costs, reasonable costs, and prior approval.

This policy has been developed in compliance with 29 CFR Part 95.21(b)(6) which reads that the WDC will maintain: "Written procedures for determining the reasonableness, allocability, and allowability of costs in accordance with the provisions of the applicable Federal cost principles and the terms and conditions of the award."

B.    POLICY

Allowable costs are those costs which are permitted, reasonable, and necessary to fulfill the functions of a given Federal program. The allowability of costs for any subrecipient of funds from the WDC is determined in conformance with OMB Circular A-21, Cost Principles for Educational Institutions , A-87, Cost Principles for State, Local and Indian Tribal Governments , or A-122, Cost Principles for Non-Profit Organizations and, as appropriate, the Workforce Investment Act (WIA) and associated regulations, State WIA Title I-B policies.

The WDC does not permit the expenditure of WIA funds on costs that are specifically prohibited under WIA as outlined in 20 CFR 667.260-270 or in Section 195(5)(5) of the Act. These prohibitions are provided in Attachments A and B, respectively. Additionally, the WDC does not permit the expenditure of WIA funds on donations to other organizations. The WDC does permit the expenditure of WIA funds on costs that are allowable under Section 134(d)(2)(3)(4) of the Act within the policy and procedures guidance provided by the WDC atwww.wdcsc.org. These allowable costs are described in Attachment C.

Within this context, a cost may be considered allowable by the Snohomish County Workforce Development Council if all of the following conditions are met:

  1. the cost is allowable under the Workforce Investment Act and associated regulations;
  2. the cost is allowable under the governing OMB Circulars and the governing Code of Federal Regulations;
  3. the cost is allowable under Generally Accepted Accounting Principles;
  4. the cost is allowable under Washington State Policy Number 3260;
  5. the cost is incurred in a manner consistent with policies and procedures that apply uniformly to both Federally funded and other activities of the subrecipient;
  6. the cost is accorded consistent treatment;
  7. the cost is not included as a cost or used to meet cost sharing or matching requirements of any other Federally funded program in any period;
  8. the cost is adequately documented;
  9. the cost is incurred in a manner consistent will all restrictions in the subrecipient's contract;
  10. the cost is incurred through standard procurement practices of the subrecipient that conform with all relevant Federal, State, and local requirements; and
  11. the cost is free of conflict of interest and incurred with an appearance of fairness as defined in WIA Title I-B Program Policy and Procedures Memorandum #04-01, Conflict of Interest and Appearance of Fairness .

In addition to being allowable, the WDC requires that a cost be reasonable . The WDC considers a cost to be reasonable if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of the reasonableness of a specific cost must be scrutinized with particular care by subrecipients which receive a preponderance of their revenues from grants and/or contracts containing Federal and/or State funds.

In determining the reasonableness of a given cost, consideration must be given to all of the following:

  1. whether the cost is or is not of a type generally recognized as ordinary and necessary for performance of the contract;
  2. whether the restraints and requirements imposed are or are not consistent with generally accepted sound business practices and arms length bargaining in addition to Federal, State, and local laws, regulations, policies, and the contract itself;
  3. whether the purchaser did or did not act with prudence in the circumstances considering her/his responsibilities to the subrecipient, the WDC, the State, and the Federal Government; and
  4. whether there were or were not any significant deviations from established procurement practices of the subrecipient.

No property (equipment) expenditures may be made without prior approval of the WDC. Only property (equipment) identified in a fully executed contract between the WDC and the subrecipient and other costs expressly approved in writing by the WDC may be considered to have prior approval.

Property (equipment) is defined as tangible, nonexpendable property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit, including all costs related to the property's final intended use. In addition, this definition includes the following small and attractive assets with a unit cost of $300 or more:

  • Communications equipment including cellular telephones and PDAs,
  • Optical devices,
  • Cameras and photographic projection equipment,
  • Microcomputer systems, laptop and notebook computers,
  • Other information technology accessorial equipment and components (e.g., scanners, data displays)
  • Office equipment,
  • Record Players, radios, television sets, tape recorders, VCRs, DVD players, and video cameras.

Attachment A

Prohibited Costs Under WIA

20 CFR 667.260-270

Sec. 667.260 May WIA title I funds be spent for construction?   WIA title I funds must not be spent on construction or purchase of facilities or buildings except: (a) To meet a recipient's, as the term is defined in 29 CFR 37.4, obligation to provide physical and programmatic accessibility and reasonable accommodation, as required by section 504 of the Rehabilitation Act of 1973, as amended, and the Americans with Disabilities Act of 1990, as amended; (b) To fund repairs, renovations, alterations and capital improvements of property, including: (1) SESA real property, identified at WIA section 193, using a formula that assesses costs proportionate to space utilized; (2) JTPA owned property which is transferred to WIA title I programs; (c) Job Corps facilities, as authorized by WIA section 160(3)(B); and (d) To fund disaster relief employment on projects for demolition, cleaning, repair, renovation, and reconstruction of damaged and destroyed structures, facilities, and lands located within a disaster area. (WIA sec. 173(d).)

Sec. 667.262 Are employment generating activities, or similar activities,allowable under WIA title I?   (a) Under WIA section 181(e), WIA title I funds may not be spent on employment generating activities, economic development, and other similar activities, unless they are directly related to training for eligible individuals. For purposes of this section, employer outreach and job development activities are directly related to training for eligible individuals. (b) These employer outreach and job development activities include: (1) Contacts with potential employers for the purpose of placement of WIA participants; (2) Participation in business associations (such as chambers of commerce); joint labor management committees, labor associations, and resource centers; (3) WIA staff participation on economic development boards and commissions, and work with economic development agencies, to: (i) Provide information about WIA programs, (ii) Assist in making informed decisions about community job training needs, and (iii) Promote the use of first source hiring agreements and enterprise zone vouchering services, (4) Active participation in local business resource centers (incubators) to provide technical assistance to small and new business to reduce the rate of business failure; (5) Subscriptions to relevant publications; (6) General dissemination of information on WIA programs and activities; (7) The conduct of labor market surveys; (8) The development of on-the-job training opportunities; and (9) Other allowable WIA activities in the private sector. (WIA sec. 181(e).)    

Sec. 667.264 What other activities are prohibited under title I of WIA?   WIA title I funds must not be spent on: (1) The wages of incumbent employees during their participation in economic development activities provided through a Statewide workforce investment system, (WIA sec. 181(b)(1).); (2) Public service employment, except to provide disaster relief employment, as specifically authorized in section 173(d) of WIA, (WIA sec. 195(10)); (3) Expenses prohibited under any other Federal, State or local law or regulation. (b) WIA formula funds available to States and local areas under subtitle B, title I of WIA must not be used for foreign travel. (WIA sec. 181(e).)

Sec. 667.266 What are the limitations related to religious activities?   (a) Limitations related to sectarian activities are set forth at WIA section 188(a)(3) and 29 CFR 37.6(f). (b)(1) 29 CFR part 2, subpart D governs the circumstances under which DOL support, including WIA Title I financial assistance, may be used to employ or train participants in religious activities. Under that subpart, such assistance may be used for such employment or training only when the assistance is provided indirectly within the meaning of the Establishment Clause of the U.S. Constitution, and not when the assistance is provided directly. As explained in that subpart, assistance provided through an Individual Training Account is generally considered indirect, and other mechanisms may also be considered indirect. See also 20 CFR 667.275 and 29 CFR 37.6(f)(1). 29 CFR part 2, subpart D also contains requirements related to equal treatment in Department of Labor programs for religious organizations, and to protecting the religious liberty of Department of Labor social service providers and beneficiaries. (2) Limitations on the employment of participants under WIA Title I to carry out the construction, operation, or maintenance of any part of any facility used or to be used for religious instruction or as a place for religious worship are described at 29 CFR 37.6(f)(2).

Sec. 667.268 What prohibitions apply to the use of WIA title I funds to encourage business relocation?   (a) WIA funds may not be used or proposed to be used for: (1) The encouragement or inducement of a business, or part of a business, to relocate from any location in the United States , if the relocation results in any employee losing his or her job at the original location; (2) Customized training, skill training, or on-the-job training or company specific assessments of job applicants or employees of a business or a part of a business that has relocated from any location in the United States, until the company has operated at that location for 120 days, if the relocation has resulted in any employee losing his or her jobs at the original location. (b) Pre-award review. To verify that an establishment which is new or expanding is not, in fact, relocating employment from another area, standardized pre-award review criteria developed by the State must be completed and documented jointly by the local area with the establishment as a prerequisite to WIA assistance. (1) The review must include names under which the establishment does business, including predecessors and successors in interest; the name, title, and address of the company official certifying the information, and whether WIA assistance is sought in connection with past or impending job losses at other facilities, including a review of whether WARN notices relating to the employer have been filed. (2) The review may include consultations with labor organizations and others in the affected local area(s). (WIA sec. 181(d).)

Sec. 667.270 What safeguards are there to ensure that participants in Workforce Investment Act employment and training activities do not displace other employees?   (a) A participant in a program or activity authorized under title I of WIA must not displace (including a partial displacement, such as a reduction in the hours of non-overtime work, wages, or employment benefits) any currently employed employee (as of the date of the participation). (b) A program or activity authorized under title I of WIA must not impair existing contracts for services or collective bargaining agreements. When a program or activity authorized under title I of WIA would be inconsistent with a collective bargaining agreement, the appropriate labor organization and employer must provide written concurrence before the program or activity begins. (c) A participant in a program or activity under title I of WIA may not be employed in or assigned to a job if: (1) Any other individual is on layoff from the same or any substantially equivalent job; (2) The employer has terminated the employment of any regular, unsubsidized employee or otherwise caused an involuntary reduction in its workforce with the intention of filling the vacancy so created with the WIA participant; or (3) The job is created in a promotional line that infringes in any Way on the promotional opportunities of currently employed workers. (d) Regular employees and program participants alleging displacement may file a complaint under the applicable grievance procedures found at Sec. 667.600. (WIA sec. 181.)

Attachment B

Prohibited Costs Under WIA

Section 195(5)(6) of the Act

(5) No person or organization may charge an individual a fee for the placement or referral of the individual in or to a workforce investment activity under this title. (6) The Secretary shall not provide financial assistance for any program under this title that involves political activities.

Attachment C

Allowable Costs Under WIA Adult and Dislocated Worker Programs

Section 134(d)(2)(3)(4) of the Act

2) Core services.--Funds described in paragraph (1)(A) shall be used to provide core services, which shall be available to individuals who are adults or dislocated workers through the one- stop delivery system and shall, at a minimum, include-- (A) determinations of whether the individuals are eligible to receive assistance under this subtitle; (B) outreach, intake (which may include worker profiling), and orientation to the information and other services available through the one-stop delivery system; (C) initial assessment of skill levels, aptitudes, abilities, and supportive service needs; (D) job search and placement assistance, and where appropriate, career counseling; (E) provision of employment statistics information, including the provision of accurate information relating to local, regional, and national labor market areas, including-- (i) job vacancy listings in such labor market areas; (ii) information on job skills necessary to obtain the jobs described in clause (i); and (iii) information relating to local occupations in demand and the earnings and skill requirements for such occupations; and (F) provision of performance information and program cost information on eligible providers of training services as described in section 122, provided by program, and eligible providers of youth activities described in section 123, providers of adult education described in title II, providers of postsecondary vocational education activities and vocational education activities available to school dropouts under the Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2301 et seq.), and providers of vocational rehabilitation program activities described in title I of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.); (G) provision of information regarding how the local area is performing on the local performance measures and any additional performance information with respect to the one-stop delivery system in the local area; (H) provision of accurate information relating to the availability of supportive services, including child care and transportation, available in the local area, and referral to such services, as appropriate; (I) provision of information regarding filing claims for unemployment compensation; (J) assistance in establishing eligibility for-- (i) welfare-to-work activities authorized under section 403(a)(5) of the Social Security Act (as added by section 5001 of the Balanced Budget Act of 1997) available in the local area; and (ii) programs of financial aid assistance for training and education programs that are not funded under this Act and are available in the local area; and (K) followup services, including counseling regarding the workplace, for participants in workforce investment activities authorized under this subtitle who are placed in unsubsidized employment, for not less than 12 months after the first day of the employment, as appropriate. (3) Intensive services.-- (A) In general.--Funds allocated to a local area for adults under paragraph (2)(A) or (3), as appropriate, of section 133(b), and funds allocated to the local area for dislocated workers under section 133(b)(2)(B), shall be used to provide intensive services to adults and dislocated workers, respectively-- (i)(I) who are unemployed and are unable to obtain employment through core services provided under paragraph (2); and (II) who have been determined by a one-stop operator to be in need of more intensive services in order to obtain employment; or (ii) who are employed, but who are determined by a one- stop operator to be in need of such intensive services in order to obtain or retain employment that allows for self- sufficiency. (B) Delivery of services.--Such intensive services shall be provided through the one-stop delivery system-- (i) directly through one-stop operators identified pursuant to section 121(d); or (ii) through contracts with service providers, which may include contracts with public, private for-profit, and private nonprofit service providers, approved by the local board. (C) Types of services.--Such intensive services may include the following: (i) Comprehensive and specialized assessments of the skill levels and service needs of adults and dislocated workers, which may include-- (I) diagnostic testing and use of other assessment tools; and (II) in-depth interviewing and evaluation to identify employment barriers and appropriate employment goals. (ii) Development of an individual employment plan, to identify the employment goals, appropriate achievement objectives, and appropriate combination of services for the participant to achieve the employment goals. (iii) Group counseling. (iv) Individual counseling and career planning. (v) Case management for participants seeking training services under paragraph (4). (vi) Short-term prevocational services, including development of learning skills, communication skills, interviewing skills, punctuality, personal maintenance skills, and professional conduct, to prepare individuals for unsubsidized employment or training. (4) Training services.-- (A) In general.--Funds allocated to a local area for adults under paragraph (2)(A) or (3), as appropriate, of section 133(b), and funds allocated to a local area for dislocated workers under section 133(b)(2)(B) shall be used to provide training services to adults and dislocated workers, respectively-- (i) who have met the eligibility requirements for intensive services under paragraph (3)(A) and who are unable to obtain or retain employment through such services; (ii) who after an interview, evaluation, or assessment, and case management, have been determined by a one-stop operator or one-stop partner, as appropriate, to be in need of training services and to have the skills and qualifications to successfully participate in the selected program of training services; (iii) who select programs of training services that are directly linked to the employment opportunities in the local area involved or in another area in which the adults or dislocated workers receiving such services are willing to relocate; (iv) who meet the requirements of subparagraph (B); and (v) who are determined to be eligible in accordance with the priority system, if any, in effect under subparagraph (E). (B) Qualification.-- (i) Requirement.--Except as provided in clause (ii), provision of such training services shall be limited to individuals who-- (I) are unable to obtain other grant assistance for such services, including Federal Pell Grants established under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); or (II) require assistance beyond the assistance made available under other grant assistance programs, including Federal Pell Grants. (ii) Reimbursements.--Training services may be provided under this paragraph to an individual who otherwise meets the requirements of this paragraph while an application for a Federal Pell Grant is pending, except that if such individual is subsequently awarded a Federal Pell Grant, appropriate reimbursement shall be made to the local area from such Federal Pell Grant. (C) Provider qualification.--Training services shall be provided through providers identified in accordance with section 122. (D) Training services.--Training services may include-- (i) occupational skills training, including training for nontraditional employment; (ii) on-the-job training; (iii) programs that combine workplace training with related instruction, which may include cooperative education programs; (iv) training programs operated by the private sector; (v) skill upgrading and retraining; (vi) entrepreneurial training; (vii) job readiness training; (viii) adult education and literacy activities provided in combination with services described in any of clauses (i) through (vii); and (ix) customized training conducted with a commitment by an employer or group of employers to employ an individual upon successful completion of the training. (E) Priority.--In the event that funds allocated to a local area for adult employment and training activities under paragraph (2)(A) or (3) of section 133(b) are limited, priority shall be given to recipients of public assistance and other low-income individuals for intensive services and training services. The appropriate local board and the Governor shall direct the one-stop operators in the local area with regard to making determinations related to such priority. (F) Consumer choice requirements.-- (i) In general.--Training services provided under this paragraph shall be provided in a manner that maximizes consumer choice in the selection of an eligible provider of such services. (ii) Eligible providers.--Each local board, through one-stop centers referred to in subsection (c), shall make available-- (I) the State list of eligible providers of training services required under section 122(e), with a description of the programs through which the providers may offer the training services, and the information identifying eligible providers of on-the-job training and customized training required under section 122(h); and (II) the performance information and performance cost information relating to eligible providers of training services described in subsections (e) and (h) of section 122. (G) Use of individual training accounts.-- (i) In general.--Except as provided in clause (ii), training services provided under this paragraph shall be provided through the use of individual training accounts in accordance with this paragraph, and shall be provided to eligible individuals through the one-stop delivery system. (ii) Exceptions.--Training services authorized under this paragraph may be provided pursuant to a contract for services in lieu of an individual training account if the requirements of subparagraph (F) are met and if-- (I) such services are on-the-job training provided by an employer or customized training; (II) the local board determines there are an insufficient number of eligible providers of training services in the local area involved (such as in a rural area) to accomplish the purposes of a system of individual training accounts; or (III) the local board determines that there is a training services program of demonstrated effectiveness offered in the local area by a community-based organization or another private organization to serve special participant populations that face multiple barriers to employment. (iii) Linkage to occupations in demand.--Training services provided under this paragraph shall be directly linked to occupations that are in demand in the local area, or in another area to which an adult or dislocated worker receiving such services is willing to relocate, except that a local board may approve training services for occupations determined by the local board to be in sectors of the economy that have a high potential for sustained demand or growth in the local area. (iv) Definition.--In this subparagraph, the term ``special participant population that faces multiple barriers to employment'' means a population of low-income individuals that is included in one or more of the following categories: (I) Individuals with substantial language or cultural barriers. (II) Offenders. (III) Homeless individuals. (IV) Other hard-to-serve populations as defined by the Governor involved.