What costs are “modified” in the 10% de minimus?

When you elect to apply the 10% de minimus rate rather than develop an indirect cost rate proposal, you are not required to submit a proposal for approval. There are, though, some assumptions about this that you need to know. 

The regulations around this state that, for the 10%, the “cost pool and base for distribution” for the indirect cost is  divided by modified total direct costs.

So what are these modified direct costs? From Uniform Guidance: 

Modified total direct costs, consisting all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). Modified total direct costs what exclude equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distributions of indirect costs, and with the approval of the cognizant agency for indirect costs.

Some centers chose the 10% because they didn’t feel comfortable with the more complex proposals, policies and application of an indirect cost rate. Hopefully if you chose the 10%, you understand that this has a specific method for applying that 10% in keeping with these requirements

Are your paying your consumer as an employee or a contractor?

 

The center has some odd jobs around the place — lawn mowing, cleaning, maybe web development or support of the Facebook page. Some centers pay consumers as peer support mentors. Is it okay to hire a consumer to do this? And if so, would the consumer be an employee or a contractor?

First let’s consider the issue of paying consumers to work for the center. Is this allowable? Yes, either as a contractor or as an employee. It is  required that more than half of our staff have disabilities — but if this is a part time person you don’t get to say you now have more than 50% employees with disabilities by adding part time people in as full time. You need to use the full time equivalent as you figure this.

Secondly, you need to pay the individual the going rate for the job they are doing. You may need to ask around or get bids regarding that. You definitely DO NOT want to arrange sub-minimum wages or even sub-par wages for any of your employees.

The next question is, is this an employee? If so, you need to follow the organization’s hiring practices as well as what the law requires. Usually this means that the position is in the budget and organizational chart, that there is a job description, that the organization opened the job up to interested applicants, that the person received new staff orientation, and that they completed an application, a W2 and any other documents staff sign (like receipt of policies or the code of ethics). And that the center withholds taxes and matches social security. If they are your employee your probably also provide their tools, materials, and require a certain schedule. They may be eligible for vacation, leave or other benefits depending on your policy. You will also need to evaluate their performance — even if they are part time — at least once a year.

Is the individual a contractor? Contractors usually set their own hours and use their own tools and equipment. Usually they are also covered by their own insurance rather than yours. Again, the contract should be in the budget under contract services, and there should be some sort of written documentation of the amount to be paid by the project or the hour. This can be fairly informal — hand written, signing acceptance of a proposal, email, etc. Then there should be a vendor file for the contract, and it should include a W9 and the proposal, along with any payment documentation.

One or the other of these would apply to anyone doing work for your center, unless they are an unpaid volunteer (a topic for another day). All personnel paid through the grant will fall into one or the other of these categories, which should be consistent and clear. If they are an employee you can’t suddenly decide that this month you will contract with them instead.

As to whether these types of job are allowable — it is permissible to use federal funds for these kinds of activities, yes, but it must be included in the approved budget. If you need to go outside the approved budget for contract services, that is not allowed without a budget revision. If you are making the individuals employees but they are temporary or part time, that is unusual but allowed; but your board should know about it in advance. Do you have unspent money in your personnel budget? Typically hiring for other positions is allowed as long as it is in keeping with the organization’s policies — typically board approval for a new organizational chart and job description — and justification that the position advances the purpose of the grant.

So are T-shirts an allowable cost?

Question from the DSE:  If T-shirts are purchased for the attendees of a youth event (11 t-shirts altogether) and they aren’t souvenirs, are they allowable?  I’m looking at uniform guidance trying to decide, I initially denied it but rethinking things.

Answer: My typical answer to all questions related to allowability is, “It depends.” This is a great example of how the use of the item, and not the item itself, determines its category and therefore its allowability.  Promo giveaways and souvenirs are not typically allowed. Advertising (except for job openings) is not typically allowed. However, outreach is allowed (and required, actually, to your identified unserved or underserved groups). As a result the expenses that are considered to be essential to accomplishing the tasks of the grant project are allowable.  An argument can be made that T-shirts are essential when a group from around the state gets together for an outreach or advocacy event, for example. That way the participants know each other to be part of the same group and the strength in the numbers of the advocates has an impact. Giveaways that draw people to a table where they sign in can become the basis for outreach to youth. Pens with the center’s name and number on them and business cards and brochures can all be classified as outreach materials.

If the CIL can justify that the purchase was essential in outreach, advocacy or some other project of its grant, it should be allowed.

Please note the word essential. Every purchase you make with federal grant dollars is required to be reasonable (a good price), necessary, allowable and allocatable.

For your reference, the regulations contain a list of selected items of cost that may not be allowable. They are alphabetical and you can find them following the intro here.

Do notice that language makes a difference. For example, Centers are required, and Statewide Independent Living Councils are allowed (if addressed in SPIL) to do resource development.  Like outreach, if you categorize an expense as advertising or public relations or fund raising then the expense may be unallowable. If you categorize it properly and show it is reasonable and necessary as resource development, it should be alllowed.

Do other states or federal departments help support Centers?

There are a number of different ways that centers are funded through their states or through other federal funds.

  • Some states provide state general funds. This usually requires the passage of a bill or something in the state budget designated to go to centers. States that have been successful in securing these funds have been able to show that the Centers are cost effective and provide important outcomes for people with disabilities.
  • There are several sources of funds that sometimes go to centers through their department of rehabilitation. These may include social security reimbursement funds, Innovation and Expansion funds and contracts for employment or youth transition services through Title I of the Rehab Act.
  • Some centers have the grant from HUD for administering existing housing vouchers, especially in rural areas where there isn’t a powerful housing council at the city or county level.
  • Americorp volunteers can assist with the development of anti-poverty efforts, including building a curriculum for financial literacy for consumers, for example. These are short term projects, so whatever you desire for them to do must be completed and leave a lasting outcome after their service ends. A nice plus — if someone is hired under Americorp their stipend doesn’t count against benefits, so it can be a nice transition into the work place for some people with disabilities.
  • Some cities and counties hire centers to provide driver training to their transportation people,  marking wheelchairs re: tie downs for transportation, etc.
  • Accessibility is often an area of strength. Certifying access of public places or  assistance with checking accessibility of polling places, for example, can be paid work.

I know you want more base funding, but centers often end of putting a package of little things together to make it work. You can find more on marketing and giving at http://www.ilru.org/topics/public-relations-marketing

When does the CIL representative to the SILC have a conflict of interest?

The regulations require that every SILC has one member that is an Executive Director of a CIL and is chosen by the CILs in the state. Because they are selected to represent the centers, it is not a conflict of interest when they express the needs, questions or concerns that all centers have.

It becomes a conflict of interest if the matter before the council favors only the center that the rep is from. When this happens, if the reg continues to have input, that is unfair to the other CILs.

The SILC should have conflict of interest policy and procedures. We recommend that, when there is a conflict or a perceived conflict, the person with the conflict discloses it, and then is not involved in the discussion or voting that follows (recuses themselves from the discussion and vote). Personally I feel it is appropriate for them to leave the room while the discussion and vote take place, so that council members don’t have the added pressure of that individual’s scrutiny during the motion, discussion and vote. Since the SILC meetings are open and public, this isn’t really something that you can require, but shows a strong ethical standard if members do this voluntarily.

I have been asked if the CIL rep can also chair the council. They council elects its officers from among its voting membership, so the CIL rep would be eligible to serve as an officer. Personally, though, I advice against having the CIL rep as the chair of the council. In some ways being chair limits the ability of the individual to represent the Centers. The chair can’t make a motion and doesn’t get to vote except in case of a tie. Even in the discussion the chair’s role is typically limited to what is needed to hear all the other members, to entertain motions, and to oversee the vote. A CIL rep who is free to make motions and vote is more a representative of the Centers than one who serves as chair.

Your ex officio members should not make motions or vote. They are there to provide information that is conducive to the SILC’s partnerships with other state-wide entities. Since they are not voting members, they should not serve as officers. They may, however, be members of committees, or even chair a committee if the council chair feels that is appropriate.

Your SILC is preparing policies and procedures (or updating them) related to the SILC Indicators. Be sure that you address Conflict of Interest in these policies.

How many ex officio members should a SILC have?

First, do note that the SILC Assurances have requirements around appointments, including that the SILC regularly (not less than annually) provides the appointing authority recommendations for eligible appointments; and the Indicators require that the SILC have written policies and procedures that must include a method for recruiting members, reviewing applications and regularly providing recommendations for eligible appointments to the appointing authority. There is nothing in either of these statements that describes these items as applying only to voting members, so it follows that ex officio members are also included in this.

Here is what the regs say:

§1329.14   Establishment of a SILC.

(a) To be eligible to receive assistance under this part, each State shall establish and maintain a SILC that meets the requirements of section 705 of the Act, including composition and appointment of members.

(b) The SILC shall not be established as an entity within a State agency, including the DSE. The SILC shall be independent of and autonomous from the DSE and all other State agencies.

And here is what the Rehab Act says:
SEC. 705. STATEWIDE INDEPENDENT LIVING COUNCIL.
(a) ESTABLISHMENT.—To be eligible to receive financial assistance under this chapter, each State shall establish and maintain a Statewide Independent Living Council (referred to in this section as the ‘‘Council’’). The Council shall not be established as an entity within a State agency.
(b)
COMPOSITION AND APPOINTMENT.—
(1)
APPOINTMENT.—Members of the Council shall be appointed by the Governor or, in the case of a State that, under State law, vests authority for the administration of the activities carried out under this Act in an entity other than the Governor (such as one or more houses of the State legislature or an independent board), the chief officer of that entity. The appointing authority shall select members after soliciting recommendations from representatives of organizations representing a broad range of individuals with disabilities and organizations interested in individuals with disabilities.

2)
COMPOSITION.—The Council shall include—
(A) among its voting members, at least 1 director of a center for independent living chosen by the directors of centers for independent living within the State;
(B) among its voting members, for a State in which 1 or more centers for independent living are run by, or in conjunction with, the governing bodies of American Indian tribes located on Federal or State reservations, at least 1 representative of the directors of such centers; and
(C) as ex officio, nonvoting members, a representative of the designated State entity, and representatives from State agencies that provide services for individuals with disabilities.

As you can see, the law seems to indicate that the ex officio members are appointed in the same way as voting members — by the governor or other appointing entity if you have a law for that. However, it is quite clear from the indicators/assurances that the SILC is to pass on nominations to the governor for consideration, and the requirement for “representatives from State agencies that provide services for individuals with disabilities” does not say that representatives of ALL State agencies that provide services for individuals with disabilities must be included. It seems to me that the SILC can suggest ones that seem most advantageous to the SILC, keeping in mind that consumer control is essential.  If other appointments have not taken place to supply more than 50% people with disabilities who do not work for a CIL or the state, then it may not be possible to include all the state agencies; I would certainly not require them in executive order or bylaws as required. Only require the representative from the DSE and make the others permitted but not required, maybe? Or perhaps include two, as the term “representatives” in the language is plural.

One more thought.  Often the state employees are more confident in expressing themselves than some of your less experienced members. Do not allow an ex officio member to dominate the conversation. I mentioned at the SILC Congress that there was a state I worked with that was deciding which of the two state agencies to go with, back when they were developing the most recent SPIL. They asked the ex officios if they would be willing to leave the room while this was discussed. They did — and it was as if the entire council was new. Suddenly everyone felt more free to talk and they discussed the decision and how to roll it out. That gave me a glimpse of the fact that ex officio members can stifle the ability of the SILC to autonomously do its work. Keep this in mind and make sure they don’t overwhelm the other council members with their professional opinions. The same thing can happen with center staff who serve on the SILC. Your consumer-controlled, autonomous council must not be subject to the DSE or other state employees or to the centers, who are a part of your group. That is why 51% of the council and of the voting members must be people with disabilities who don’t work for the state or for a Center.

How consistent does my indirect cost rate need to be?

word indirect on a paper torn between in and direct

A DSE called during an on-site review of a center to clarify what a center was doing with its indirect costs. “They are claiming the 10% di minimus.” Okay, so far so good. “But if they have any costs over that amount they are throwing it into their state grant for payment.”  Oh-oh. Not so good.

The whole purpose of allocation, however your center does it, is to share the indirect costs in a fair, equitable way. Each of your grants, or cost objectives, should bear the costs in proportion to what the grant brings to you. It is sometimes okay to combine funding sources (if they have the same purpose, serve the same people, etc.) and apply the percentage to those sources combined, in the same percentage. It is not, however, okay to give one of your funding sources the excess amounts for something your rate doesn’t cover.

When centers fell under RSA, most of us used a cost allocation plan to allocate shared, administrative and overhead costs. That plan identified those shared costs, and then described the methodology for calculating the amount to go to each cost objective, or funding source.

When Centers moved over to the Independent Living Administration/ACL/HHS they asked us to develop an indirect cost rate. We have some resources on our website about how to do this. We have recommended against the 10% di minimus (meaning you can charge 10% and aren’t required to have an approved rate) because we found that it would not typically meet the needs of a center to pay their indirect costs. While it is somewhat more complicated, actually calculating your indirect costs and then sharing them across your funding sources is the most fair way for shared costs to be shared.

These are costs like your bathrooms, lobby, hallways and conference room and the utilities that go with them. Your administrative staff, especially the executive director, human resources and fiscal staff, do work that benefits all of your programs. You need to figure out how those programs share those costs.

There are a couple of other options for managing these costs. If you only have one funding source you might not need a methodology for sharing indirect costs, since all would be direct to that one source. (This seems short-sighted, though, because as you do your required resource development your funding sources should expand.)

There are a few centers whose fund accounting is very precise and which charge all costs as direct. They are still required to be able to show how the allocation of shared costs if fair, but each expense is shared at the time the expense is incurred, based on their internal policies.

The point is, each grant should pay its fair share of indirect costs and no more.

Lobbying — You can, but not with federal dollars!

Our primary funder, Heath and Human Services, has addressed lobbying:

The Department of Health and Human Services (HHS) fully supports federal restrictions on lobbying using federal funds by HHS grant recipients.  In general, recipients of federal funds are not allowed to use said federal funding to lobby federal, state, or local officials or their staff to receive additional funding or influence legislation.  The citations below provide a statutory/ regulatory background as well as Department-wide restrictions and links to the implementing legislation, regulation, or guidance.  If you have further questions, please contact the Chief Grants Management Official within the appropriate awarding agency.

As a general matter, these lobbying restrictions preclude recipients from:

  • Spending federal funds to influence an officer or employee of any agency or Congressional member/staff regarding federal awards;
  • Failing to submit required certification and disclosure forms (i.e., SF-LLL);
  • Using grants funds provided to non-profit organizations or institutions of higher education to influence an election, contribute to a partisan organization, or influence enactment or modification of any pending federal or state legislation; or
  • Expending federal funds to influence federal, state, or local officials or legislation.

“Spending federal funds” includes spending time or other resources such as indirect costs and direct travel or other expenses. You must keep track of these separately if you lobby, and should have a place on your Personnel Activity Report or time sheet that breaks out any time spent lobbying and make sure you aren’t paying that or the related indirect costs with federal funds. (This website also gives the background from regulations and history.)

“Lobbying” is also defined by the IRS:

Direct lobbying refers to attempts to influence a legislative body through communication with a member or employee of a legislative body, or with a government official who participates in formulating legislation. Grassroots lobbying refers to attempts to influence legislation by attempting to affect the opinion of the public with respect to the legislation and encouraging the audience to take action with respect to the legislation. In either case, the communications must refer to and reflect a view on the legislation.

In other words, if you are seeking to influence a vote on legislation, you are lobbying, whether you personally ask for a yes or no vote, or you urge others to convince their representatives to vote yes or no. If you choose to lobby, there are several things you need to sign or file.  Annually the IRS form 990  asks you about lobbying. You are allowed to do this, remember, but have to show it isn’t your major activity. If you lobby, say so on your 990.

You also must clearly identify the time spent in lobbying, including travel time, on your time sheet or personnel activity report. If the Executive Director doesn’t use a timesheet, s/he must still complete a record of this time. (The requirement is that you complete an after-the-fact accounting of your time and sign it.) Then the time and indirect costs related to the time must be paid for separately from federal grants or pass-through dollars. Typically fund raising dollars or income from projects not tied to the federal grant are used for this purpose.

Our duty to advocate

Lately I have had even more questions than usual around the difference between advocacy and lobbying. I will address lobbying more specifically next week, but before I do I want to talk about advocacy. Let’s start with what we must do instead of what we can’t do with federal dollars.

As you probably know, advocacy is defined in three parts – self-advocacy, advocacy on behalf of another, and system advocacy. Here is the definition from the regulations found at 45 CFR 1329.4:

Advocacy means pleading an individual’s cause or speaking or writing in support of an individual. To the extent permitted by State law or the rules of the agency before which an individual is appearing, a non-lawyer may engage in advocacy on behalf of another individual. Advocacy may—

(1) Involve representing an individual—

(i) Before private entities or organizations, government agencies (whether State, local, or Federal), or in a court of law (whether State or Federal); or

(ii) In negotiations or mediation, in formal or informal administrative proceedings before government agencies (whether State, local, or Federal), or in legal proceedings in a court of law; and

(2) Be on behalf of—

(i) A single individual, in which case it is individual advocacy;

(ii) A group or class of individuals, in which case it is systems advocacy; or

(iii) Oneself, in which case it is self advocacy.

This is a core service that is required of all centers, although we have some flexibility in how we accomplish it. Advocacy must be a key component of your center.  It is our history, our birthright if you will. CILs came into being because of the discrimination and injustice in this country against people with disabilities. Title VII of the Rehabilitation Act and of these regulations starts out with: The purpose of title VII of the Act is to promote a philosophy of independent living (IL), including a philosophy of consumer control, peer support, self-help, self-determination, equal access, and individual and system advocacy, in order to maximize the leadership, empowerment, independence, and productivity of individuals with disabilities, and to promote the integration and full inclusion of individuals with disabilities into the mainstream of American society…

The very core of a Center for Independent Living (CIL) is a mission to enact social change related to people with disabilities. If we are going to continue to see change for the better in our society, we must speak out about injustice. When our key civil rights legislation — the Americans with Disabilities Act (ADA), the only civil rights legislation that passed with bi-partisan support — is attacked by the congress, we have a role in describing both the positive impact under the law and the negative impact without it. Let me say again, this can be done without lobbying, and we are required to do it.

The strategy used to pass the ADA included town hall style meetings where people from every state had a chance to express the discrimination they faced day to day. People wrote “discrimination diaries” and shared them in testimony at the state level and before congress. The nation-wide, blatant discrimination became so obvious that the nation knew it had to pass a law to guarantee the civil rights of people with disabilities.

Those town hall meetings, where people told their stories, were not lobbying. Advocacy can include public education, policy research, position papers or statements on issue, get out the vote efforts, coalition participation or building, litigation and boycotts along with direct action such as that led so ably by ADAPT at the local and national levels. All of these things are allowable for centers as part of the required service of advocacy, and it is permissible to pay for the time and cost of doing this through the federal funds in your grant.

Advocacy can also include lobbying, both direct and grass roots, but these activities cannot be paid for with federal funds.

“Lobbying” is defined quite narrowly by the IRS:

Direct lobbying refers to attempts to influence a legislative body through communication with a member or employee of a legislative body, or with a government official who participates in formulating legislation. Grass roots lobbying refers to attempts to influence legislation by attempting to affect the opinion of the public with respect to the legislation and encouraging the audience to take action with respect to the legislation. In either case, the communications must refer to and reflect a view on the legislation.

But as I said, more about lobbying next week. Remember that CILs must advocate. It is a required services. And SILCs may advocate if they have included language about advocacy in their State Plan for Independent Living.

Quality Assurance — How do we assure CIL quality?

Question:We are working to develop a new Quality Assurance Program. Part of the Program will include following-up with recently closed consumers and providing them a Consumer Satisfaction Survey. Do you know what obligations, if any, we have as a CIL to provide these? Are there any rules/regulations surrounding this?

Also, if you know of any information to help us develop and execute our Quality Assurance Program (and/or perhaps you know of an outstanding CIL with a great QAP), please let me know. Much appreciated.

Response:

First, a shout out to other centers — please share if you have great ideas for measuring quality and we will include them in a future post. Send to me at paulamcelwee.ilru@gmail.com  As far as requirements, you are required to provide the information on the Year-End report, which includes the goals set and the goals met by category. You are also expected to have consumer input into your organization, and often that comes from satisfaction surveys of some kind. Some kind of consumer satisfaction is expected, which your state can agree to, or your center can do it independently, or a combination of the two.
This is a somewhat complicated question that is very specific to the state and the Center. Are you looking only at satisfaction, or do you have specific outcomes from your strategic plan or your state contracts that you are wanting to measure?
You can start with consumer satisfaction, of course, and/or whether their goals were met, but when you speak to a quality assurance program I suspect you might be thinking of something bigger.
We have training on our website to address this bigger picture. It is 11 hours of video around how CILs can measure outcomes and is found at http://www.ilru.org/training/outcome-measures-for-centers-for-independent-living  Take a look and let me know if that is what you are seeking, or if you want something else.
As far as how centers communicate with consumers to get their input, that is sometimes difficult to do by mail or email or even phone — often the response rate is very low. Often our folks have used all their time on their phone, have moved, or don’t have access to a computer. We suggest that you consider a point of service survey, a card or quick survey that the consumer is given when they come into the center. A card they can drop in a comment box, or that they are given with a postage paid envelope if staff meet them elsewhere.We suggest just two or three question. Keeping it short is one way to assure a better return as well. Most of us tire quickly when answering questions by phone or in writing. You can also use a combination of approaches.
Whatever methods you use, though, you first need to know what questions you want to ask. If you have a strategic plan, you may have goals you want to measure. That is one place to look for the important questions. Some centers use a consumer group to help them develop the questions your survey will address.