Sneak Preview: ETA Guidance Addresses Real Property Costs

Jerry Ashworth
August 30, 2019 at 07:16:42 ET
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(The following was excerpted from a recent article in the Federal Grants Management Handbook.) The Department of Labor (DOL) Employment and Training Administration (ETA) recently issued guidance to its regional administrators, state workforce agencies and other ETA grant recipients on a wide range of real property cost issues, such as handling idle facilities and disposing of real property, under ETA grant programs.

Real property under the Office of Management and Budget uniform guidance is defined as “land, including land improvements, structures and appurtenances thereto, but excludes moveable machinery and equipment” (§200.85). The ETA guidance applies to nonfederal entities receiving ETA grants particularly under Title I of the Workforce Innovation and Opportunity Act (WIOA) (Pub. L. 113-128), the Wagner-Peyser Act (29 U.S.C. §49, et seq.) and the Unemployment Insurance program.

ETA award recipients are required to obtain prior approval from DOL agency before making capital expenditures, which are the costs to acquire capital assets such as land and buildings (§200.13). The prior approval request should include information and documents about which funds and the amount of those funds will be used and what they will be used for, and must be submitted to the ETA grant officer at least 30 days before the requested action is to occur (§200.407 and 2 C.F.R. §2900.16). If the nonfederal entity obtains prior approval, the capital expenditure will be allowed as a direct cost, and will be charged in the period in which the expenditure is incurred, or as otherwise determined appropriate and negotiated with ETA (§200.439(b)(4)). Capital expenditures are unallowable as indirect costs (§200.439(b)(7)).

The ETA guidance states that costs incurred for ordinary and normal rearrangement and alterations of facilities are allowable as indirect costs under the listed ETA programs (§200.462(a)). Prior approval from the ETA grant officer is needed if direct charges will be incurred. “Whether prior approval is needed to use grant funds to make improvements to affiliated one-stop centers, or to make repairs to meet local or state facility codes or to make alterations so that the premises are suitable for carrying out the grant, depends on whether the rearrangement or reconversion is an ordinary and normal expense that can be charged indirectly or a capital expenditure that must be charged as a direct cost,” ETA explained. “Capital improvements may not be made with WIOA Title I funds without prior approval. Any expenditure must be reasonable and cannot significantly deviate from the nonfederal entity’s established practice and policies regarding the incurrence of costs, which may unjustifiably increase the federal award’s costs (§200.404(e)).”

(The full version of this story has now been made available to all for a limited time here.)

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