Restrictions on FFP for Publicly Owned Buildings

ACTION TRANSMITTAL

OCSE-AT-77-8

DATE: July 28, 1977

TO: State Agencies Administering Child Support Enforcement Plans Approved Under Title IV-D of the Social Security Act and other Interested Individuals

SUBJECT: Restrictions on FFP for Publicly Owned Buildings.

PURPOSE: The purpose of this Action Transmittal is to clarify the distinction between public and privately-owned buildings in costs allowable for FFP.

CONTENT: Title 45 CFR Part 74, Appendix C, Part II c(2)(a) identifies rental costs as an allowable item for privately owned buildings. There is no authorization for FFP for the cost of renting space in publicly owned buildings.

Depreciation and use allowances, however, are allowable costs for publicly owned buildings as stated in 45 CFR Part 74, Appendix C, Part II (C)(2)(d). The procedures for using depreciation and use allowances are discussed in 45 CFR Part 74, Appendix C, Part II (B)(11)(a) through (e). Title 45 CFR Part 74, Appendix C, Part II (B) (11) (a) states that "Grantees may be compensated for the use of buildings, capital improvements, and equipment through use allowances or depreciation .... However, a combination of the two methods may not be used in connection with a single class of fixed assets." Title 45 CFR Part 74, Appendix C, Part II(B)(11)(d) specifies "In lieu of depreciation, a use allowance for buildings and improvements may be computed at an annual rate not exceeding 2 percent of acquisition costs." Therefore, a county under cooperative agreement utilizing a use allowance would determine the cost per square foot, based on acquisition costs, apply that cost to the area occupied by the child support enforcement section, and compute the 2 percent use allowance. Dividing the resulting figure by twelve yields the monthly use allowance cost to be billed to the IV-D agency. All utilities, janitorial services, etc. would be added on separately to the monthly bill.

An agency under cooperative agreement may elect to follow the depreciation method, provided adequate property records are maintained. The applicable depreciation rate would then be used.

In any event, any cooperative agreement, which includes rental costs for publicly owned buildings, should be amended to adhere to Title 45 CFR Part 74, Appendix C, Part II (C)(2)(d).

INQUIRIES TO: OCSE Regional Representatives

Deputy Director
Office of Child Support Enforcement