Mississippi Administrative Code › Title 18 - HUMAN SERVICES › Part 8 - MDHS Subgrant Manual › Chapter 1 - Introduction › Rule 18-8-1.1 - Repeal Prior Rules/Manuals › Section 18-8-1.1-4 - Financial Management

Current through June 25, 2024
Overview
In accordance with
					 2 C.F.R. §
											200.302, the Mississippi Department of Human
					 Services (MDHS) requires that subgrantees and any lower-tier subrecipients have
					 in place, prior to the receipt of funds, a financial management system that
					 will provide:
1. Accurate, current, and
				  complete disclosure of the financial status of each subgrant and lower-tier
				  sub-recipients;
2. Records which
				  identify the source and application of funds for subgrant supported activities,
				  specifically information pertaining to subgrant awards, obligations,
				  unobligated balances, assets, liabilities, outlays, and income;
3. Effective control over and accountability
				  for all subgrant funds, property, and other assets;
4. Comparison of actual expenditures with
				  reported costs and budgeted cost for each cost category and work
				  activity;
5. Procedures to ensure
				  that original cash requested under MDHS subgrants will be expended within
				  thirty (30) calendar days of receipt upon first request;
6. Procedures to minimize the time between
				  receipt and expenditure of subgrant funds;
7. Procedures to ensure that all expenditures
				  are obligated within the effective dates of the subgrant period;
8. Procedures for determining that the cost
				  is allowable and that it may be allocated to an activity;
9. Procedures to prohibit the transfer of
				  funds between federally funded programs and/or between subgrants or between
				  activities within the same subgrant;
10. Procedures to ensure that each expense
				  paid from a subgrant was authorized in the budget of the subgrant charged with
				  the expense;
11. Accounting records
				  (including a general ledger or comparable) that are supported by source
				  documentation;
12. Audits which
				  analyze the fiscal integrity of the subgrantee (Single Audit required for
				  subgrantees that expend $750,000 or more of federal financial assistance -
				  pursuant to 2 C.F.R. §
											200 ); and
13. A systematic method to assure timely and
				  appropriate resolution of findings identified in audits or management
				  reviews.
Accounting Procedures
Separate financial records shall be maintained for each
					 subgrant and lower-tier sub-recipients. Separate financial systems ensure
					 record keeping requirements are met and eliminates potential conflicts with the
					 subgrantees usual record keeping system, which may reflect a different fiscal
					 year, or accounting by function or department rather than by subgrant or work
					 activity. Each subgrantee shall maintain one set of accounting records for the
					 subgrant and shall separately identify the receipts and disbursements for each
					 subgrant or other source of funds.
The subgrantee shall be able to isolate and trace every
					 subgrant dollar from receipt to expenditure and have on file appropriate
					 supporting documentation for each and every transaction. Examples of
					 documentation includes, but is not limited to the following:
1. Vendor invoices,
2. Bills of lading,
3. Purchase orders,
4. Payment vouchers,
5. Payroll,
6. Bank statements and
				  reconciliations,
7. Documentation
				  to verify that only eligible clients were served,
8. Employee activity sheets to verify
				  activities performed and the actual hours worked for each activity/subgrant,
				  and/or
9. Cash receipt logs to
				  verify all funds received and the actual date of receipt.
All the basic accounting records and documents listed below
					 comprise the framework for a good financial management system. If implemented
					 properly, such a system can provide accurate, current, and complete disclosure
					 of the financial status of each subgrant, work activity, and cost
					 category.
1. Cash Receipts
				  Journal
2. Cash Disbursements
				  Journal
3. Payroll
				  Journal
4. General Journal/Ledger
Subgrantees shall develop their accounting system to meet
					 the particular needs of their subgrant. The amounts recorded daily to the
					 individual accounts shall be totaled and posted to the general ledger at least
					 monthly in order for the subgrantee to complete the monthly Claim Support Form:
					 Cost Reimbursement (MDHS-BA-CS-001). Recording procedures shall be designed to
					 provide information accurately while at the same time serving as an effective
					 control in preventing mistakes and safeguards against unauthorized uses of
					 funds.
Internal Controls
Subgrantees of MDHS shall have in place a financial
					 management process that contains adequate internal controls for the
					 administration of the subgrant program. This system of internal controls may be
					 evaluated during an audit or monitoring review of the subgrantee.
The following internal accounting control procedures are
					 required of MDHS subgrantees and lower-tiered sub-recipients:
1. Record all cash receipts
				  immediately;
2. Compare deposit
				  slips with receipts;
3. Bond
				  employees who handle cash;
4.
				  Deposit all checks or other cash receipts within two (2) business
				  days;
5. Make all payments by
				  pre-numbered checks;
6. Reconcile
				  bank accounts monthly by comparing the cash balance in the accounting records
				  to the cash balance in the bank account and retain a copy of the reconciliation
				  in the files;
7. Use serially
				  numbered purchase orders and receiving reports;
8. Issue checks to vendors only in payment of
				  original invoices that have been approved and matched with purchase orders and
				  receiving reports;
9. Distinguish
				  between the time when funds are received and when the funds are
				  disbursed;
10. Mark all
				  documentation paid to prevent duplicate payments; and
11. Retain a Certified Public Accountant firm
				  for an audit, if required. (Refer to Chapter 7: Monitoring for
				  exceptions.)
Documentation Requirements
The accounting system of each MDHS subgrantee shall provide
					 the monitors and/or auditors with adequate documentation to support the
					 subgrantee's financial claims. Source documents are required to support
					 transactions entered into the subgrantee's record keeping system. The following
					 is a list of the minimum documentation required for selected transaction
					 types:
CATEGORY
DOCUMENTATION
Grant Revenues
Federal, State, and Other Receipts
Identification of the source of funds (i.e.,
								  signed subgrant agreement), request for cash and/or request for reimbursement
								  (i.e., Claim Support Form), cash receipts journal, Paymode receipts, validated
								  deposit slips, withdrawals and/or financial reports
Program Income
Record of service, purpose, amount, and/or
								  deposit slips
Matching Cash Contributions
Record of source donor, dates, rates, amounts,
								  and/or deposit slips
Matching Non-Cash Contributions
Record of source donor, dates, rates, amounts,
								  and activities performed including time, date, place, and agenda, certification
								  of cost or market/appraised values, and documentation to verify that expenses
								  reported as in-kind match and all contributions were in proportion to the
								  benefits received by the subgrant that was matched. Subgrantee's in-kind
								  contributions must be accepted and documented as part of the Subgrantee's
								  costsharing or matching when such contributions meet the criteria as outlined
								  in 2 C.F.R. §
																200.306(b) (1-5)."
Grant Expenditures
Salaries and Fringe Benefits
Personnel files must include a job application or
								  resume, IRS W-4 Form, State Tax withholding form, I-9 Form (if hired after May
								  1987), e-verify confirmation, date of hire, current approved salary/wage, pay
								  stubs, approved time sheets and/or activity reports which reflect the actual
								  hours worked and duties performed each pay period. Time distribution/activity
								  sheets are required when the employee's time is charged to more than one (1)
								  subgrant or activity. Fringe benefits documentation must include the detail of
								  the elements that comprise the fringe benefits (i.e. FICA, health insurance,
								  supplemental insurance, etc.).
Travel
An approved travel voucher showing that all
								  travel expenses were incurred for the benefit of the subgrant; and copies of
								  supporting bills including out-of-state meal receipts, hotel bills, conference
								  registration fee receipts, and/or conference agendas.
Telephone
Complete telephone bills/invoice and longdistance
								  telephone logs that indicates the person calling and/or the person called, the
								  date and time of the call, the reason and purpose of the call, the number
								  called, and the subgrantee that benefitted from the telephone call. For
								  subgrantees with multiple locations, allotment/portion per location is
								  required.
Equipment/Property
Original vendor invoices, receiving reports,
								  purchase orders, competitive quotes or proof of newspapers advertisements for
								  bids, property records, authorization to purchase equipment, and/or any other
								  documentation necessary for purchasing law conformity. All purchases of
								  equipment/property must be made in accordance with applicable purchasing
								  requirements.
Commodities (Supplies)
Original vendor invoices, receipts, receiving
								  reports, purchase orders, records of competitive quotes and/or other
								  solicitations issued, proof of required solicitation advertisements, property
								  records, and/or any other procurement related documentation necessary for
								  purchasing compliance of commodities/supplies. All purchases of commodities
								  (supplies) must be made in accordance with applicable procurement
								  regulations.
Contractual Services
Current contracts that are active and valid
								  during the subgrant agreement term for services charged to the subgrant,
								  evidence of completion of contracts, billings for services (including utility
								  bills), current rental or lease agreements, receipts for postage costs and/or
								  contracts for meter machines, competitive quotes or proof of newspaper
								  advertisement for bids (if applicable), and/or documentation of fair market
								  value. All contracts for services must comply with applicable rules and
								  regulations.
Subsidies, Loans and Grants
Payments to/for clients: Client attendance
								  records, documentation of services provided, including dates, times, names, and
								  client signatures, and/or documentation to verify units of service provided.
								  Lower-Tier Sub-recipients: Copies of the lower-tier subrecipient agreement,
								  including budget information and the scope of services required, financial and
								  programmatic reports, documentation of payments made to the sub-recipient,
								  evidence of monitoring of lower-tier sub-recipients, documentation of
								  compliance with procurement procedures, and required compliance with the MDHS
								  Subgrant Manual.
Other Direct Cost
Original vendor invoices, receiving reports,
								  purchase orders, competitive quotes or proof of newspaper advertisements for
								  bids (if applicable), and/or documentation of any expenses incurred for the
								  benefit of the subgrant.
The list above is not all inclusive. Additional
					 documentation may be required if deemed necessary.
Cost Allocation/Indirect Costs
MDHS subgrantees may hold and administer more than one (1)
					 federal subgrant at a given time and may have different federally approved cost
					 allocation plans and/or indirect cost rate agreements for each subgrant. The
					 Subgrantee shall be responsible for submitting its federally approved cost
					 allocation plan and/or federally approved indirect cost agreement well in
					 advance of an anticipated MDHS subgrant agreement start date. If the
					 subgrantee's cost allocation plan and/or indirect cost rate agreement is
					 updated during the effective dates of the subgrant, a copy of the updated plan
					 shall be submitted to the MDHS Funding Division that awarded the subgrant as
					 soon as possible, but no later than five (5) business days after federal
					 approval of any cost allocation plan and/or indirect cost rate
					 agreement.
Each subgrantee shall develop a cost allocation plan and/or
					 an indirect cost rate agreement that covers the subgrantee's entire operation.
					 Costs included in the plan should only be those that are not easily
					 identifiable with a particular subgrant and/or administrative cost of the
					 subgrantee, in which shall be equitably distributed to all subgrant programs
					 and/or other sources of funds in proportion to the relative benefits
					 received.
Required documentation for indirect costs includes:
1. A subgrant cost allocation plan or an
				  indirect cost rate agreement that has been reviewed and approved by the
				  appropriate Federal cognizant agency and MDHS, and
2. Identification of indirect cost in the
				  accounting records that support the actual indirect cost incurred, and evidence
				  to support the monthly allocation of indirect costs to the subgrant.
The cost allocation plan and/or indirect cost rate
					 agreement submitted with the subgrant shall be developed in compliance with the
					 requirements contained in the cost principles applicable to each
					 subgrant.
Scrutiny of all vouchers and invoices by subgrantees and/or
					 by MDHS is necessary to verify that they are only for legitimate cost, eligible
					 under the governing regulations, and authorized in the subgrant agreement. MDHS
					 shall include testing to ensure that costs are properly allocated to the
					 correct subgrant and work activity.
The cost allocation plan should be accompanied by a
					 certification of review by MDHS.
Types of Costs and Documentation
The following is a listing of selected types of cost and
					 suggested bases for distributing shared costs as direct costs to MDHS
					 subgrants:
Salaries/Fringe Benefits
Number of hours worked for each
								  subgrant/activity
Auditing
Direct audit hours dollar amount of each subgrant
								  in proportion to the total amount audited
Office Space Used and Related Costs
Square feet of occupied space (utilities,
								  janitorial service, etc.)
Local Telephone
Number of telephones
Fidelity Bond Expense
Employees subject to bond or penalty
								  amounts
Motor Pool Cost
Number of miles driven and/or days used
Printing and Reproduction
Direct hours, job basis, pages printed,
								  etc.
Copy Machine and Related
Number of copies made as documented by a copy log
								  or access code
Postage Costs
Amount of postage used by each subgrant as
								  documented by log
Payroll Employees Independent Contractors
Payroll Employees/ Independent Contractors paid,
								  in-whole or in-part from MDHS subgrant shall prepare time sheets indicating the
								  hours worked each pay period. The distribution of payroll charges and/or
								  payments to independent contractors shall be based on the actual time worked
								  for the benefit of the subgrant/activity
Lower-Tier Sub-Recipients
All expenditures that involve agreements between the
					 subgrantee and a third-party (performing a service related to the program),
					 must be fully disclosed in the cost summaries and budget narrative. If the
					 provisions of a subgrant agreement allow a lower-tier sub-recipient to manage
					 and administer subgrant-supported projects, the MDHS Subgrantee must obtain
					 prior written approval from MDHS before any work is performed by a lower-tier
					 sub-recipient and prior to any funds transferred.
MDHS Subgrantee shall have appropriate agreements in place
					 with each lower-tier sub-recipient which shall be available for MDHS review. If
					 authorized, MDHS Subgrantee agreements with lower-tier sub-recipient(s) shall
					 contain language binding and requiring any lower-tier sub-recipient agreement
					 to adhere to all provisions of the MDHS Subgrant Manual, applicable Federal and
					 State laws, and all guidelines established by MDHS. The subgrantee must provide
					 an explanation as to why a lower-tier subrecipient is warranted.
Copies of rental agreements, service agreements, consultant
					 agreements, etc. shall be available to validate the basis of the cost category.
					 In addition, any contractual procurement agreement received in response to
					 solicitation, shall be submitted to MDHS within thirty (30) days after
					 execution.
Budget Preparation
A budget is a tool used by the subgrantee to express its
					 planned goals and objectives. It is a management tool to be used in addressing
					 general management functions such as planning, operational performance, and
					 control. The subgrantee's fiscal staff shall have on file the currently
					 approved subgrant budget including any approved modifications. The required
					 forms and accompanying instructions that shall be used in preparing a budget
					 for MDHS subgrants are:
1. 'Budget
				  Summary' (MDHS-BS-1006): A compilation of the detailed data contained in Cost
				  Summary Support Sheet (MDHS-CSSS-1007);
2. 'Cost Summary Support Sheet'
				  (MDHS-CSSS-1007): A listing of the various budget categories separated for each
				  activity on the Budget Summary' (MDHS-BS-1006); and
3. Budget Narrative: A written justification
				  adequately explaining the subgrantee's funding needs according to the
				  identified budget categories outlined in the subgrantee's Cost Summary Support
				  Sheet. The narrative shall relate funding needs to the operation of individual
				  programs or activities. Sufficient detail within each line item of expenditure
				  and each activity shall be used to clearly explain the funding needs of the
				  operation. Insufficient narrative justification will preclude favorable
				  consideration of requested funding levels. For a sample Budget Narrative,
				  please visit the MDHS website.
For any Subgrant Budget to be approved by MDHS, the
					 subgrantee
must
present its planned budget in the same format as
					 the MDHS Budget Narrative Form, utilizing the MDHS Budget Summary form and the
					 MDHS Cost Summary Support Sheet.
Budget Activities
Each MDHS subgrant shall be organized and budgeted by
					 activities according to the major functions necessary to accomplish the goals
					 and objectives of the subgrant. This grouping by activities shall be used in
					 preparing the Budget Summary' and Cost Summary Support Sheet' as well as the
					 Budget Narrative. If the first narrative submission does not contain sufficient
					 information, including that information that is program specific, MDHS will
					 request additional documentation.
If any administrative costs (direct or indirect) are
					 included in the subgrant, they shall be budgeted in an Administration activity
					 subject to any limits on the amount of administration that may be charged to
					 the subgrant. Subgrantees shall consult with the MDHS funding division to
					 determine what activities are allowable under the subgrant and whether there
					 are limits on the amount of administrative costs that may be charged to the
					 subgrant.
Budget Modification
The Subgrantee is allowed up to, but not exceeding, three
					 (3) Subgrantee-requested subgrant budget modifications during the term of the
					 subgrant agreement to include any subgrant agreement modifications.
MDHS may initiate budget modifications of any active
					 subgrant agreement (during the term of an active subgrant agreement or
					 modification period) which may be in addition to any Subgrantee-requested
					 budget modifications. MDHS may request and/or initiate these budget
					 modifications due to changes in federal program requirements and/or funding
					 formulas from the associated federal partner agency or for reasons that serve
					 the best interests of the federal program and/or the State. Any subgrant
					 modification initiated and/or requested by MDHS due to change in MDHS
					 programmatic policy and/or as the result of direction from MDHS federal funding
					 partner, will NOT be treated as a subgrantee-initiated modification.
NOTE: Please see distinction of allowed Subgrantee
					 initiated modifications to Social Services Block Grant (SSBG) subgrant
					 agreements under the heading "Special Requirements."
Budget Categories
Subgrantees are required to report deviations from budget
					 or project scope or objective and must request prior approvals from MDHS prior
					 to implementing any budget and program plan revisions, in accordance with this
					 section.
Subgrantees are required to separate subgrant costs into
					 the below identified and explained categories to capture all associated costs
					 to perform under an MDHS Subgrant. Subgrantees shall be responsible for
					 properly designating their associated costs into the below identified and
					 explained categories pursuant to the requirements and guidance reflected in
					 federal cost principles as codified in
					 2 C.F.R. §
											200 and as required of any other federal cost
					 principle as identified codified in the Code of Federal Regulations by the
					 applicable and governing Federal Partner.
For any Subgrantee's budget categories
including
an "estimated" amount for projected costs, the
					 "estimated" amount for that category will be treated as a "Not To Exceed"
					 amount for that category and/or line item.
Subgrantees shall structure and separate federal funds
					 authorized under MDHS subgrants into the following budget categories as
					 applicable. MDHS will monitor the subgrantee budget according to the below
					 budget categories for compliance with federal cost principles and requirements
					 contained within the MDHS Subgrant Manual:
1. Salaries and Wages
2. Fringe Benefits
3. Travel
4. Contractual Services
5. Commodities
6. Capital Outlay - Equipment
7. Capital Outlay - Other
8. Subsides, Loans, and Grants
9. Indirect Costs
Salaries and Wages
This Subgrant budget category includes payments made to
					 officers and employees of a subgrant as compensation for personnel services
					 based on the percentage of time dedicated to the subgrant. The salary budget
					 category shall contain a line item or listing of each position authorized and
					 the salary amount to be paid to each full-time employee and/or hourly rate
					 authorized, and number of hours authorized for each part-time employee charged
					 to the subgrant. The salary line should disclose whether salaries are to be
					 paid from the grant fund or in-kind match. The salary budget category shall be
					 strictly adhered to unless a formal modification of the subgrant is approved. A
					 vacant position may be filled at or below the budgeted rate only and no
					 additional positions may be charged to the subgrant unless approved through the
					 budget modification process.
Salaries included as a part of the budget narrative shall
					 be identified by a clear position/title as well as the appropriate salary for
					 that position. Subgrantees shall also identify, as a percentage, the amount of
					 effort for each position that will be dedicated to performance of the MDHS
					 subgrant agreement. Please see the below example for illustrative purposes
					 only:
Position
								Title
Salary
% Dedicated to MDHS
								Subgrant
Salary Charged to MDHS
								Subgrant
Program Manager
$50,000.00
25%
$12,500.00
Salary information shall be included as part of Budget
					 Narrative as required above for both the Administrative and Programmatic budget
					 components.
Reference 2 C.F.R.
§
											200.430
Fringe Benefits
This Subgrant budget category includes payments made for
					 the employer's portion of expenses for social security (F.I.C.A. and Medicare),
					 employee health/life/disability insurance premiums, worker's compensation
					 insurance, unemployment insurance, and pension plan costs. The fringe benefits
					 budget category may include compensation paid to employees during periods of
					 authorized absences from the job for vacation leave, sick leave, and/or
					 military leave provided such cost are absorbed by all of the subgrantee's
					 activity. The fringe benefits budget category must contain a line item or
					 listing of each fringe benefit and the amount authorized on the Cost Summary
					 Support Sheet' and in the Budget Narrative. Fringe benefits shall be limited to
					 no more than thirty-nine percent (39%) of salaries, unless justification is
					 submitted in the budget narrative, and approved by MDHS. The amounts withheld
					 from the employee's gross pay (i.e., federal and state taxes, employee
					 health/life/disability insurance premiums) cannot be budgeted or claimed for
					 reimbursement under the subgrant as fringe benefits. Please see the example
					 below for illustrative purposes only. If using the same salary as the previous
					 example of $50,000 with $12,500 dedicated to the MDHS subgrant, calculations
					 would be as follows:
Fringe Benefits
Employer FICA - 7.65% of gross salaries
$956.25
Workmen's Compensation - 3% of gross
								  salaries
$375.00
Employer Health Insurance - up to $120 per mo.
								  per employee for 12 mos. x 25%
$360.00
Leave - 3%
$375.00
Total Administration Fringe
								  Benefits
$2,066.25
For Subgrantees classified as an Institute of Higher
					 Education (pursuant to 34
					 C.F.R. §
												600.4 ), tuition may be
					 included as a Fringe sub-category.
Reference 2 C.F.R.
§
											200.431
Fringe Benefits-Lump Sum Payments
A Subgrantee may use grant funding for leave payouts to
					 former employees upon subgrant termination and as part of the subgrant
					 closeout; however, pursuant to
					 2 C.F.R. §
												200.343 and §
											200.431, leave payments for each
					 employee are limited to the allocated percentage of each employee within the
					 Subgrant Agreement. Further, leave payments for each former employee are only
					 allowable to former employees identified in the Subgrant Agreement and such
					 payments shall only reflect amounts for leave accrued by each former employee
					 during the Subgrant Agreement period.
Travel
This Subgrant budget category includes payments made for
					 transportation, lodging, and related cost to employees, officers, and
					 volunteers who are in travel status on official business for the purpose of
					 performing proposed services outlined within the subgrant agreement. Travel
					 includes reimbursement for in -state travel, reasonable and project-related
					 costs for conferences, meetings, etc., and staff reimbursement for the use of
					 subgrantee owned vehicles (vehicles owned by the subgrantee organization) and
					 privately owned vehicles for project-related functions. The rate of
					 reimbursement per mile will be at the rate approved by the Department of
					 Finance and Administration on the date that travel was performed, as long as
					 the total amount of the subgrant award charged with the expense is not
					 exceeded. (Please see below "DFA Travel Link"). While MDHS will reimburse for
					 mileage, MDHS will not reimburse fuel charges as a travel line item (refer to
					 commodities for reimbursement for fuel as travel) for subgrantee owned vehicles
					 or privately owned vehicles of employees under this category. Meal costs will
					 be reimbursed based upon the actual cost of each meal; up to the maximum daily
					 meal rate, established by DFA, and receipts will not be required for meals
					 reimbursed through subgrants funded by MDHS. No travel shall be allowed for
					 employees funded through other programs unless approved by MDHS. No
					 reimbursements will be made for the cost of commuting.
Note: MDHS
will not
reimburse for mileage
and
fuel for a single project related travel
					 occurrence.
Pursuant to
					 2 C.F.R. §
												200.475, travel costs are expenses incurred
					 by employees who are in travel status on official business. These costs must be
					 consistent with costs normally allowed under the MDHS written travel
					 reimbursement policy as outlined below. These costs may also be subject to the
					 Federal requirements as outlined in
					 2 C.F.R. §
												200.474.
Section §
											25-3-41, Mississippi Code
					 Annotated (1972), authorizes the Mississippi Department of Finance and
					 Administration to set guidelines for travel reimbursement of state officials
					 and employees. As these laws and regulations are amended, this policy shall be
					 amended accordingly.
A complete list of all current rules and regulations
					 established by the Mississippi Department of Finance and Administration (DFA)
					 is available at
www.dfa.ms.gov
. State
					 travel regulations are also contained in the Mississippi Agency Accounting
					 Policies and Procedures Manual (MAAPP), Section 13.
All travel related expenses will be reimbursed at the State
					 rates and pursuant to DFA policies identified above. Should the federal grant
					 exclude certain travel reimbursements and thereby conflict with any DFA travel
					 policy or regulation, then the federal grant exclusion and/or reimbursement
					 requirement shall control. In that instance, Subgrantees must provide written
					 documentation showing that the Subgrantee exercised due diligence to identify
					 the least expensive and most practical method of transportation.
DFA Travel Link
https://www.dfa.ms.gov/dfa-offices/purchasing-travel-and-fleet-management/bureau-of-purchasing-and-contracting/travel/
Reference 2 C.F.R.
§200.475
Contractual Services
This Subgrant budget category includes payments for
					 services rendered by persons/entities other than employees of the subgrantee
					 through formal, written, contractual agreements between those persons/entities
					 and the subgrantee. Examples include, but are not limited to: postage,
					 telephone/internet/pager services, utilities, rent, repair or service
					 agreements, service charges, computer software, contract workers that are
					 independent contractors, and/or professional membership fees directly related
					 to MDHS subgrant program operations, as well as, programmatic payments for
					 speakers, trainers, consultants, and other hired professionals.
Rental costs are typically allowable as long as they meet
					 the requirement of 2 C.F.R.
					 §
												200.465, grant terms and conditions
					 and other applicable federal regulations. Rental costs are generally associated
					 with a lease agreement. A lease is a contract describing the terms under which
					 one party (tenant) agrees to rent property owned by another party (landlord).
					 Leases fall into two categories:
1)
				  arm's length or
2) less-than-arm's
				  length.