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1. Most governmental units provide certain services, such as motor pools, computer centers, <br />purchasing, accounting, etc., to operating agencies on a centralized basis. Since <br />federally-supported awards are performed within the individual operating agencies, there needs <br />to be a process whereby these central service costs can be identified and assigned to benefitted <br />activities on a reasonable and consistent basis. The central service cost allocation plan provides <br />that process. All costs and other data used to distribute the costs included in the plan should be <br />supported by formal accounting and other records that will support the propriety of the costs <br />assigned to Federal awards. <br />2. Guidelines and illustrations of central service cost allocation plans are provided in a brochure <br />published by the Department of Health and Human Services entitled "A Guide for State and <br />Local Government Agencies: Cost Principles and Procedures for Establishing Cost Allocation <br />Plans and Indirect Cost Rates for Grants and Contracts with the Federal Government." A copy of <br />this brochure may be obtained from the Superintendent of Documents, U.S. Government Printing <br />Office. <br />B. Definitions. <br />1. "Billed central services" means central services that are billed to benefitted agencies and/or <br />programs on an individual fee-for-service or similar basis. Typical examples of billed central <br />services include computer services, transportation services, insurance, and fringe benefits. <br />2. "Allocated central services" means central services that benefit operating agencies but are not <br />billed to the agencies on a fee-for-service or similar basis. These costs are allocated to benefitted <br />agencies on some reasonable basis. Examples of such services might include general accounting, <br />personnel administration, purchasing, etc. <br />3. "Agency or operating agency" means an organizational unit or sub-division within a <br />governmental unit that is responsible for the performance or administration of awards or <br />activities of the governmental unit. <br />C. Scope of the Central Service Cost Allocation Plans. The central service cost allocation plan <br />will include all central service costs that will be claimed (either as a billed or an allocated cost) <br />under Federal awards and will be documented as described in section E. Costs of central services <br />omitted from the plan will not be reimbursed. <br />D. Submission Requirements. <br />1. Each State will submit a plan to the Department of Health and Human Services for each year <br />in which it claims central service costs under Federal awards. The plan should include (a) a <br />projection of the next year's allocated central service cost (based either on actual costs for the <br />most recently completed year or the budget projection for the coming year), and (b) a <br />reconciliation of actual allocated central service costs to the estimated costs used for either the <br />most recently completed year or the year immediately preceding the most recently completed <br />year. <br />42 <br /> <br />