# ENCLOSURE I

## MODEL COST POLICY STATEMENT

The following model Cost Policy Statement is intended to be used as
guidance for nonprofit organizations that seek reimbursement for
indirect costs under Federal awards. The model assumes that the ABC
Nonprofit Organization uses the direct allocation basis of charging
cots. That is, in addition to direct costs, ABC has in place accounting
procedures which enable it to direct charge some costs that would
otherwise be considered indirect costs (see, for example, the
description below as to how photocopy costs are charged).

**[COST POLICY STATEMENT]{.underline}**

**[ABC NONPROFIT ORGANIZATION]{.underline}**

I. General Accounting Policies

A.  Basis of Accounting -- Accrual Basis

B.  Fiscal Period -- July 1 through June 30

C.  Allocation Basis -- Direct Allocation Basis

D.  Indirect Cost Rate Allocation Base -- Salaries and Wages including
    Applicable Fringe Benefits

E.  (If ABC Nonprofit Organization needed a fringe benefit rate, it
    would describe its fringe benefit allocation base at this point)

F.  ABC maintains adequate internal controls to insure that no costs is
    charged both directly and indirectly to Federal contracts or grants.

G.  ABC accumulates all indirect costs and revenues in accounts titled,
    "Indirect Cost-Expense" and "Indirect Cost-Revenue" respectively.

II\. Description of Cost Allocation Methodology

A.  Salaries and Wages

> 1\. **Direct Costs** -- The majority of ABC's employee's direct charge
> their
>
> salary costs since their work is specifically identifiable to specific
> grants,
>
> contracts or other activities of the organization such as lobbying,
> fund
>
> raising or providing services to members. The charges are supported by
>
> auditable time records which reflect the actual activities of
> employees.

2\. **Indirect Costs** -- The following staff charge 100% of their
salary costs

> indirectly:
>
> Executive Director
>
> Chief Financial Officer
>
> Personnel Officer
>
> Secretary to the Executive Director
>
> Receptionist

3\. **Mixed Charges** -- The following employees may charge their salary
costs

> to both direct and indirect activities:
>
> Project Officer
>
> Director of Operations
>
> Data Entry Clerk
>
> The distinction between direct and indirect is primarily on functions.
> For
>
> example, when the positions shown are performing functions that are
>
> [necessary]{.underline} and [beneficial]{.underline} to all programs
> they are indirect. When
>
> functions are specific to one more programs they are direct because
> they
>
> do not benefit all.

Auditable time records which reflect the actual activities of employees
are

> maintained to support the mix of direct/indirect charges. The time
> records
>
> are certified by the Executive Director.
>
> Release time costs (variation leave earned, sick leave used, and
> holiday
>
> pay) are considered part of salary costs. Consequently, separate
> claims
>
> for release time costs are not made. ABC's accounting system records
>
> release time as a direct or indirect cost in the same manner that
> salary
>
> costs are recorded. Vacation leave earned but not used during each
> fiscal
>
> period is recorded as a cost in the period earned.

B.  Fringe Benefits

> ABC contributes to the following fringe benefits for its employees:
> unemployment insurance, workers' compensation, F.I.C.A., health
> insurance, and matching contributions to a defined benefit pension
> plan.

Since ABC's accounting systems tracks fringe benefit costs by individual

> employee and charges those costs directly or indirectly in same manner
> as salary and wage costs are recorded, ABC does not need to have a
> fringe benefit rate established.

C.  Travel

> Travel costs are charged either as a direct charge or an indirect
> charge depending upon the predominant purpose of the trip. Costs
> incurred for travel are supported by auditable travel vouchers and
> costs are limited to those allowable under the Federal Travel
> Regulations, unless expressly allowed by a contract or grant.

D.  Board Expenses

> Board expenses charged on an indirect basis are for travel to/from
> Board meetings (limited to expenses allowed under the Federal Travel
> Regulations) and an annual fee of \$250 paid to each Board member.
> Other Board expenses are absorbed by ABC and are not charged either
> directly or indirectly to Federal contracts or grants.

E.  Supplies and Material

> To the maximum extent possible, office supplies and materials are
> direct charged to the contract/grant which uses the supplies or
> materials. Supplies and materials used by staff who are engaged in
> indirect activities will be charged on an indirect basis.

F.  Occupancy Expenses

> Rent -- ABC occupies space it leases from Lessor Corporation. The
> lease provides for equal monthly payments during the term of the
> lease. Monthly lease costs are allocated, based on square footage,
> directly and indirectly as follows:

a.  Direct Costs -- The cost of space occupied by staff whose salaries

> are direct charged to costs directly.

b.  Indirect Costs -- The cost of space occupied by staff whose salaries

> are indirectly charged is charged indirectly. The cost of space for
>
> staff whose salaries are charged on a mixed basis will be allocated
>
> on a mixed basis in the same ratio as their salaries are allocated.

The cost of space required for common rates (hallways, restrooms, and

> ABC's conference room) will be accounted for as an indirect cost.
>
> ABC has developed a floor plan which identifies what areas are
>
> designated as direct and indirect charge space (based on square
> footage).

G.  Utilities

> ABC's lease includes the costs of all utilities except electricity.
> The cost of electricity is charged directly and indirectly in the same
> ratio as its space costs are charged.

H.  Communications

> A log is maintained of all fax transmissions. The cost of fax services
> is charged either directly or indirectly based upon whether a direct
> or indirect activity benefits from the transmission.
>
> Long distance telephone calls are charged either directly or
> indirectly based upon whether a direct or indirect activity benefits
> from the transmission.
>
> Local telephone service costs are prorated to direct and indirect
> charged based upon the number of telephone instruments assigned to
> ABC. Each telephone instrument is identified to either an indirect or
> direct activity. For example, ABC has 50 telephone instruments
> assigned to it. Nine of the 50 instruments are assigned to the
> Employment and Training program. Therefore, 9/50ths of the monthly
> local service charges are direct charged to the E&T grant. Five of the
> instruments are assigned to indirect staff; therefore, 5/50's of the
> monthly local service charges are charged indirectly. No telephone
> instruments are charged on a mixed basis since the costs incurred on
> that basis are immaterial in amount.
>
> ABC uses a meter system for postage charges. The postage meter has
> been programmed to identify the specific program or activity to charge
> costs against. Express mail costs are also specifically identified to
> the program or activity incurring the costs.

I.  Photocopying and Printing

> ABC maintains a photocopy activity log. From this log, ABC is able to
> prorate its photocopy expenses to each program based on the specific
> volume of copies made for each program. Administrative personnel will
> record copies made to the benefiting program to the maximum extent
> practical. In situations where the photocopies being made by
> administrative personnel cannot be identified to a specific program
> and the matter being copied relates to the activities of ABC in
> general, the cost of such copies will be charged to the "Indirect
> Cost-Expense" account.
>
> Printing expenses are charged to the benefiting activity.

J.  Outside Services

> ABC incurs outside service costs for its annual audit, legal fees, and
> for staff development specialists.
>
> The cost of the annual audit is charged indirectly.
>
> In general, legal fees are charged directly to the benefiting program
> or activity.
>
> Legal fees that are not identifiable to specific direct programs are
> charged indirectly.

K. Capital Items

Capital expenditures are charged directly to programs only in cases
where

> a contract or grant specifically authorizes such charges. No capital
> item is
>
> charged indirectly. The cost of capital items purchased with
> non-Federal
>
> funds are recovered through depreciation charges.

L. Depreciation Charges

The cost of capital items purchased with non-Federal funds which are

> used in a manner which benefits Federal programs is recovered through
>
> depreciation charges. ABC recovered the cost of capital items using
>
> straight line depreciation methods in accordance with generally
> accepted
>
> accounting principles. Depreciation charges are charged indirectly.

M.  Service to Members

> The cost of activities performed primarily as a service to member,
> clients, or the general public are classified as direct costs and bear
> their fair share of indirect costs. These activities include:
> maintenance of membership rolls, subscriptions, publications, and
> related functions, providing services and information to members,
> legislative or administrative bodies, or the public; promotion,
> lobbying and other forms of public relations; meetings and conferences
> except those held to conduct the general administration of ABC
> Nonprofit Organization; maintenance, protection, and investment of
> special funds not used in operation of ABC; and administration of
> group benefits on behalf of members or clients including life and
> hospital insurance, annuity or retirement plans, financial aid, etc...

N.  Unallowable Costs

> ABC recognizes that the following costs are unallowable charges to
> Federal awards and has internal controls in place to insure that such
> costs are not charged to Federal awards:
>
> Fund Raising, Entertainment/Alcoholic Beverages, Lobbying,
>
> Capital Expenditures unless expressly authorized by a Federal
>
> award, Advertising costs (other than for recruitment of staff or for
>
> the disposal of property) Bad Debts, Fines and Penalties and
>
> Contributions.

The cost of unallowable activities that benefit from the indirect cost
pool

> will be included in the distribution base used to calculate the
> indirect cost
>
> rate.

(Signature) (Date)

(Title)

ABC Nonprofit Organization

1111 Elm Street

Mount Pleasant, PA 15666

+---+-------------+-----------------------------------------+-----------+---+---+---+
| # |             |                                         |           |   |   |   |
| # |             |                                         |           |   |   |   |
| # |             |                                         |           |   |   |   |
|   |             |                                         |           |   |   |   |
| S |             |                                         |           |   |   |   |
| a |             |                                         |           |   |   |   |
| m |             |                                         |           |   |   |   |
| p |             |                                         |           |   |   |   |
| l |             |                                         |           |   |   |   |
| e |             |                                         |           |   |   |   |
|   |             |                                         |           |   |   |   |
| - |             |                                         |           |   |   |   |
|   |             |                                         |           |   |   |   |
| I |             |                                         |           |   |   |   |
| n |             |                                         |           |   |   |   |
| d |             |                                         |           |   |   |   |
| i |             |                                         |           |   |   |   |
| r |             |                                         |           |   |   |   |
| e |             |                                         |           |   |   |   |
| c |             |                                         |           |   |   |   |
| t |             |                                         |           |   |   |   |
|   |             |                                         |           |   |   |   |
| C |             |                                         |           |   |   |   |
| o |             |                                         |           |   |   |   |
| s |             |                                         |           |   |   |   |
| t |             |                                         |           |   |   |   |
|   |             |                                         |           |   |   |   |
| R |             |                                         |           |   |   |   |
| a |             |                                         |           |   |   |   |
| t |             |                                         |           |   |   |   |
| e |             |                                         |           |   |   |   |
|   |             |                                         |           |   |   |   |
| P |             |                                         |           |   |   |   |
| r |             |                                         |           |   |   |   |
| o |             |                                         |           |   |   |   |
| p |             |                                         |           |   |   |   |
| o |             |                                         |           |   |   |   |
| s |             |                                         |           |   |   |   |
| a |             |                                         |           |   |   |   |
| l |             |                                         |           |   |   |   |
| s |             |                                         |           |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   |             |                                         |           |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
| * |             |                                         |           |   |   |   |
| * |             |                                         |           |   |   |   |
| T |             |                                         |           |   |   |   |
| A |             |                                         |           |   |   |   |
| B |             |                                         |           |   |   |   |
| L |             |                                         |           |   |   |   |
| E |             |                                         |           |   |   |   |
| O |             |                                         |           |   |   |   |
| F |             |                                         |           |   |   |   |
| C |             |                                         |           |   |   |   |
| O |             |                                         |           |   |   |   |
| N |             |                                         |           |   |   |   |
| T |             |                                         |           |   |   |   |
| E |             |                                         |           |   |   |   |
| N |             |                                         |           |   |   |   |
| T |             |                                         |           |   |   |   |
| S |             |                                         |           |   |   |   |
| * |             |                                         |           |   |   |   |
| * |             |                                         |           |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   |             |                                         |           |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   | **          | **Description**                         | **Page    |   |   |   |
|   | Enclosure** |                                         | No.**     |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   |             |                                         |           |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   | **II**      | #### Personnel Cost Worksheet           | **8**     |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   | ** **       | ** **                                   | ** **     |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   | **II-I**    | **Notes to Enclosure**                  | **9**     |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   | ** **       | ** **                                   | ** **     |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   | **III**     | **Allocation of Personnel Worksheet**   | **10**    |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   | ** **       | ** **                                   | ** **     |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   | **IV**      | **Statement of Employee Fringe          | **11**    |   |   |   |
|   |             | Benefit**                               |           |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   |             |                                         |           |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   |             |                                         |           |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   |             |                                         |           |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   |             |                                         |           |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+
|   |             |                                         |           |   |   |   |
+---+-------------+-----------------------------------------+-----------+---+---+---+

  ------------------ ----------------- --------------- --------------- --------------- --------------- ---------------- ----------------- ------- --
  **(SAMPLE)**                                                                                                                                    

  **PERSONNEL COST                                                                                                                                
  WORKSHEET**                                                                                                                                     

  **JULY 1, 19XX TO                                                                                                                               
  JUNE 30, 19XX**                                                                                                                                 

                                                                                                                                                  

                     **ANNUAL**                        **STATE**       **WORKERS\'**   **HEALTH**      **RETIREMENT**   **TOTAL**                 

  **POSITION**       **SALARY**        **FICA**        **UNEMPLOY.**   **COMP.**       **INSURANCE**   **(F)**          **PERSONNEL**             

                     **(A)**           **(B)**         **COMP.**       **INSURANCE**   **(E)**                          **COSTS**                 

                     ** **             ** **           **©**           **(D)**         ** **           ** **            ** **             ** **   

  **EXECUTIVE        **\$60,000**      **\$4,311**     **\$240**       **\$600**       **\$2,400**     **\$4,800**      **\$72,351**              
  DIRECTOR**                                                                                                                                      

  **ADMINISTRATIVE   **22,000**        **1,683**       **240**         **220**         **2,400**       **1,760**        **28,303**                
  ASSISTANT**                                                                                                                                     

  **CONTROLLER**     **45,000**        **3,443**       **240**         **450**         **2,400**       **3,600**        **55,133**                

  **ACCOUNTANT (3)** **90,000**        **6,885**       **720**         **900**         **7,200**       **7,200**        **112,905**               

  **PROGRAM PLANNER  **120,000**       **9,180**       **960**         **1,200**       **9,600**       **9,600**        **150,540**               
  (4)**                                                                                                                                           

  **FIELD OPER.      **35,000**        **2,678**       **240**         **350**         **2,400**       **2,800**        **43,468**                
  DIRECTOR**                                                                                                                                      

  **AREA             **15,000**        **1,148**       **240**         **150**         **1,400**       **1,200**        **19,138**                
  COORDINATOR\***                                                                                                                                 

  **PROGRAM          **25,000**        **1,913**       **480**         **250**         **4,800**       **2,000**        **34,443**                
  SPECIALIST**                                                                                                                                    

  **PERSONNEL        **40,000**        **3,060**       **240**         **400**         **2,400**       **3,200**        **49,300**                
  DIRECTOR**                                                                                                                                      

  **PERSONNEL CLERK  **60,000**        **4,590**       **720**         **600**         **7,200**       **4,800**        **77,910**                
  (3)**                                                                                                                                           

  **MIS DIRECTOR**   **45,000**        **3,443**       **240**         **450**         **2,400**       **3,600**        **55,133**                

  **HEAD START       **45,000**        **3,443**       **240**         **450**         **2,400**       **3,600**        **55,133**                
  DIRECTOR**                                                                                                                                      

  **DATA ENTRY CLERK **12,000**        **918**         **240**         **120**         **1,200**       **960**          **15,438**                
  \***                                                                                                                                            

  **ALL OTHER        **700,000**       **53,550**      **12,000**      **7,000**       **120,000**     **56,000**       **948,550**       ** **   
  POSITIONS**                                                                                                                                     

                     **\$1,314,000**   **\$100,245**   **\$17,040**    **\$13,140**    **\$168,200**   **\$105,120**    **\$1,717,745**           

                                                                                                                                                  

  **(A) IN THIS                                                                                                                                   
  EXAMPLE, VACATION,                                                                                                                              
  HOLIDAY, SICK                                                                                                                                   
  LEAVE AND OTHER                                                                                                                                 
  PAID ABSENCES ARE                                                                                                                               
  INCLUDED IN                                                                                                                                     
  SALARIES AND ARE                                                                                                                                
  CLAIMED ON GRANTS,                                                                                                                              
  CONTRACT**                                                                                                                                      

  **AND OTHER                                                                                                                                     
  AGREEMENTS AS PART                                                                                                                              
  OF SALARY COST.S.                                                                                                                               
  SEPARATE CLAIMS                                                                                                                                 
  FOR THEC COSTS OF                                                                                                                               
  THESE ABSENCES ARE                                                                                                                              
  NOT MADE. (REFER                                                                                                                                
  TO ENCLOSURE                                                                                                                                    
  IV).**                                                                                                                                          

  **(B) FICA TAXABLE                                                                                                                              
  WAGES WERE                                                                                                                                      
  COMPUTED AT (6.2%                                                                                                                               
  X BASE OF \$55,500                                                                                                                              
  PER EMPLOYEE AND                                                                                                                                
  1.45% BASE OF                                                                                                                                   
  \$130,200 PER                                                                                                                                   
  EMPLOYEE).**                                                                                                                                    

  **© STATE                                                                                                                                       
  UNEMPLOYMENT                                                                                                                                    
  COMPENSATION                                                                                                                                    
  TAXABLE WAGES WERE                                                                                                                              
  COMPUTED ON THE                                                                                                                                 
  FIRST \$8,000 FOR                                                                                                                               
  71 EMPLOYEES AT 3%                                                                                                                              
  (71 X \$8,000 X 3%                                                                                                                              
  = \$17,040).**                                                                                                                                  

  **(D) WORKERS\'                                                                                                                                 
  COMPENSATION WAS                                                                                                                                
  ESTIMATED AT 1% OF                                                                                                                              
  SALARIES                                                                                                                                        
  (1%X\$1,314,000 =                                                                                                                               
  13,140)**                                                                                                                                       

  **(E) HEALTH                                                                                                                                    
  INSURANCE IS                                                                                                                                    
  COMPUTED AT \$200                                                                                                                               
  PER MONTH PER                                                                                                                                   
  EMPLOYEE: PAYS 50%                                                                                                                              
  OF COST.**                                                                                                                                      

  **(F) RETIREMENT                                                                                                                                
  IS COMPUTED AT 8%                                                                                                                               
  OF SALARIES.**                                                                                                                                  

                                                                                                                                                  

  **\* THIS                                                                                                                                       
  REPRESENT                                                                                                                                       
  EMPLOYEES WHO WILL                                                                                                                              
  WORK LESS THAN A                                                                                                                                
  TWELVE MONTH                                                                                                                                    
  PERIOD DUE TO A                                                                                                                                 
  GRANT NOT                                                                                                                                       
  RENEWED.**                                                                                                                                      

  **\*\* THESE                                                                                                                                    
  POSITIONS HAVE                                                                                                                                  
  BEEN CONSOLIDATED                                                                                                                               
  FOR ILLUSTRATIVE                                                                                                                                
  PURPOSES ONLY: ALL                                                                                                                              
  PERSONNEL                                                                                                                                       
  POSITIONS MUST BE                                                                                                                               
  IDENTIFIED                                                                                                                                      
  SEPARATELY ON THIS                                                                                                                              
  EXHIBIT.**                                                                                                                                      

                                                                                                                                                  

  **NOTE: THE                                                                                                                                     
  SALARIES AND                                                                                                                                    
  FRINGE BENEFITS                                                                                                                                 
  INCLUDED IN THIS                                                                                                                                
  SCHEDULE ARE FOR                                                                                                                                
  ILLUSTRATIVE                                                                                                                                    
  PURPOSES ONLY.**                                                                                                                                
  ------------------ ----------------- --------------- --------------- --------------- --------------- ---------------- ----------------- ------- --

**ENCLOSURE II-i**

**NOTES TO ENCLOSURE II**

**[Heading]{.underline} [Explanation]{.underline}**

Position Identify positions on the staff; includes all staff members,

> both professional and nonprofessional.

Annual Salary Reflects the actual amount to be paid for that position
during the year. In some cases some positions stop and start with
grants/contracts; and the organization's personnel may fill more than
one position during a year, but not at any one time.

F.I.C.A. Should be computed in accordance with the rates and

> maximum appropriate earnings of Social Security in effect
>
> for the period covered. This is the organization's share.

State Unemployment Should be computed in accordance with the rates and

Compensation maximum appropriate earning of Unemployment

> Compensation in effect for the period covered. This is the
>
> organization's share.

Worker's Compensation Costs should be obtainable either from the
insurance policy

> or its insurance agency.

Health Insurance Should be the actual cost to the employer for this
coverage.

Retirement Should be the actual cost paid by the employer for the

> Retirement Plan.

  ----------------- ----------------- --------------- --------------- --------------- --------------- ----------------- ----------------- --------------- ---------------- ------------- -- --
                                                                                                                                                                                            

  **SAMPLE -                                                                                                                                                                                
  ALLOCATION OF                                                                                                                                                                             
  PERSONNEL                                                                                                                                                                                 
  WORKSHEET**                                                                                                                                                                               

  **JULY 1, 19XX TO                                                                                                                                                                         
  JUNE 30, 19XX**                                                                                                                                                                           

                                                                                                                                          **STATE**                                         

                    **THIS**                          **DEPT OF**                     **DEPT OF**     **DEPT OF**       **IMMIGRATION**   **SERVICE**                                       

                    **YEAR\'S**       **INDIRECT**    **LABOR**       **DEPT OF**     **EDUCATION**   **AGRICULTURE**   **& NATURALIZ-**  **DELIVERY**    **PRIVATE**      **FUND**         

  **POSITION**      **SALARY**        **COSTS**       **OSTP**        **HHS**         **MIGRANT**     **FMHA**          **ATION SER.**    **AGENCY**      **FOUNDATION**   **RAISING**      

  **EXECUTIVE       **\$60,000**      **\$54,000**                                                                                                                         **\$6,000**      
  DIRECTOR**                                                                                                                                                                                

                                      **(90%)**                                                                                                                            **(10%)**        

  **ADMIN.          **22,000**        **22,000**                                                                                                                                            
  ASSISTANT**                                                                                                                                                                               

                                                                                                                                                                                            

  **CONTROLLER**    **45,000**        **45,000**                                                                                                                                            

                                                                                                                                                                                            

  **ACCOUNTANT      **90,000**        **90,000**                                                                                                                                            
  (3)**                                                                                                                                                                                     

                                                                                                                                                                                            

  **PROGRAM PLANNER **120,000**       **12,000**      **72,000**      **12,000**      **12,000**      **6,000**                           **6,000**                                         
  (4)**                                                                                                                                                                                     

                                      **(10%)**       **(60%)**       **(10%)**       **(10%)**       **(5%)**                            **(5%)**                                          

  **FIELD OPER.     **35,000**        **5,250**       **8,750**       **5,250**       **3,500**       **1,750**         **3,500**         **5,250**       **1,750**                         
  DIRECTOR**                                                                                                                                                                                

                                      **(15%)**       **(25%)**       **(15%)**       **(10%)**       **(5%)**          **(10%)**         **(15%)**       **(5%)**                          

  **AREA            **15,000**                                                                                                            **15,000**                                        
  COORDINATOR\***                                                                                                                                                                           

                                                                                                                                                                                            

  **PROGRAM         **25,000**                        **20,000**      **5,000**                                                                                                             
  SPECIALIST**                                                                                                                                                                              

                                                      **(80%)**       **(20%)**                                                                                                             

  **PERSONNEL       **40,000**        **40,000**                                                                                                                                            
  DIRECTOR**                                                                                                                                                                                

                                                                                                                                                                                            

  **PERSONNEL CLERK **60,000**        **60,000**                                                                                                                                            
  (3)**                                                                                                                                                                                     

                                                                                                                                                                                            

  **MIS. DIRECTOR** **45,000**        **45,000**                                                                                                                                            

                                                                                                                                                                                            

  **HEAD START      **45,000**                                        **45,000**                                                                                                            
  DIRECTOR**                                                                                                                                                                                

                                                                                                                                                                                            

  **DATA ENTRY      **12,000**                        **9,000**                       **3,000**                                                                                             
  CLERK\***                                                                                                                                                                                 

                                                      **(75%)**                       **(25%)**                                                                                             

  **ALL OTHER       **700,000**                       **280,000**     **105,000**     **70,000**      **35,000**        **70,000**        **105,000**     **35,000**                        
  POSITIONS\*\***                                                                                                                                                                           

                    ** **             ** **           **(40%)**       **(15%)**       **(15%)**       **(5%)**          **(10%)**         **(15%)**       **(5%)**         ** **            

  **TOTALS**        **\$1,314,000**   **\$373,250**   **\$398,750**   **\$163,250**   **\$85,000**    **\$42,750**      **\$73,500**      **\$131,250**   **\$36,750**     **\$6,000**      

  **\* THIS                                                                                                                                                                                 
  REPRESENTS                                                                                                                                                                                
  EMPLOYEES WHO                                                                                                                                                                             
  WILL WORKLESS                                                                                                                                                                             
  THAN A TWELVE                                                                                                                                                                             
  MONTH PERIOD DUE                                                                                                                                                                          
  TO A GRANT NOT                                                                                                                                                                            
  RENEWED.**                                                                                                                                                                                

  **\*\* THESE                                                                                                                                                                              
  POSITIONS HAVE                                                                                                                                                                            
  BEEN CONSOLIDATED                                                                                                                                                                         
  FOR ILLUSTRATIVE                                                                                                                                                                          
  PURPOSES ONLY,                                                                                                                                                                            
  ALL PERSONNEL                                                                                                                                                                             
  POSITIONS MUST BE                                                                                                                                                                         
  IDENTIFIED                                                                                                                                                                                
  SEPARATELY ON**                                                                                                                                                                           

  **THIS EXHIBIT.**                                                                                                                                                                         

  **NOTE: THE                                                                                                                                                                               
  SALARY INCLUDED                                                                                                                                                                           
  IN THIS SCHEDULE                                                                                                                                                                          
  ARE FOR                                                                                                                                                                                   
  ILLUSTRATIVE                                                                                                                                                                              
  PURPOSES ONLY.**                                                                                                                                                                          
  ----------------- ----------------- --------------- --------------- --------------- --------------- ----------------- ----------------- --------------- ---------------- ------------- -- --

**\
**

**ENCLOSURE IV**

SAMPLE -- STATEMENT OF EMPLOYEE FRINGE BENEFITS

JULY 1, 19XX TO JUNE 30, 19XX

[METHOD A]{.underline} [METHOD B]{.underline}

ANNUAL LEAVE EARNED \$ 50,384

SICK LEAVE TAKEN 25,269

HOLIDAYS [50,384]{.underline}

SUB-TOTAL RELEASE TIME \$ 126,037

FICA \$ 100,245 \$ 100,242

STATE UNEMPLOYMENT COMPENSATION 17,040 17,040

WORKER'S COMPENSATION INSURANCE 13,140 13,140

MEDICAL INSURANCE 168,200 168,200

PENSION [105,120]{.underline} [105,120]{.underline}

TOTAL EMPLOYEE BENEFITS \$ 403,745 \$ 529,779

========= =========

ALLOCATION BASE:

TOTAL SALARIES \$1,314,000 \$1,314,000

LESS: RELEASE TIME [126,037]{.underline}

CHARGEABLE SALARIES \$1,187,963

=========

EMPLOYEE FRINGE BENEFIT RATE:

\$403,745

\-\-\-\-\-\-\-\-\-\-\-- = 30.73%

\$1,314,000 =======

\$529,779

\-\-\-\-\-\-\-\-\-\-\-\-\-- = 44.60%

\$1,187,963 =======

UNDER METHOD A, FOR ESTIMATING PURPOSES ON BUDGETS, GRANTEES/CONTRACTORS
INCLUDE RELEASE TIME AS PERSONNEL SALARY COSTS; I.E., TOTAL SALARY,
ACCORDINGLY, THE FRINGE BENEFIT POOL SHOULD EXCLUDE RELEASE TIME FOR
VACATION, HOLIDAY, AND SICK LEAVE THROUGH THE FRINGE BENEFIT RATE. THE
DECISION TO USE EITHER METHOD WILL DEPEND ON THE GRANTEES/CONTRACTORS
ACCOUNTING SYSTEM AND TIME DISTRIBUTION SYSTEM.

NOTE: THESE RATES ARE FOR ILLUSTRATION PURPOSES ONLY.