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DATE JUNE 28, 2000

1. PURPOSE:To clarify how SCSEP grantees can use program income that has been generated from SCSEP activities, and to discuss requirements associated with the use of program income.

2. REFERENCES: 20 CFR Section 641.411, which refers to 29 CFR 95.24 (c) and 29 CFR 97.25 (c)(g)(2)

3. BACKGROUND:Due to the limited growth of SCSEP resources, some grantees are incorporating fee-for-service programs and considering other fund-raising activities to expand and enhance SCSEP program goals and objectives. For example, some SCSEP grantees are charging fees to private firms for placement services, selling objects made by enrollees while working at their community service jobs. The income produced by such activities is considered to be "program income" in certain circumstances. Although most SCSEP grantees do not have income-producing activities, there have been some related questions that this Bulletin attempts to address.

4. DISCUSSION: The Department of Labor (DOL) applies the standards set forth in the above-referenced CFRs requiring recipient organizations to account for program income related to projects financed in whole or in part with Federal funds. In accordance with current DOL administrative regulations and the terms and conditions of the grant award, program income shall be added to the Federal funds committed to the project and shall be used to further eligible project or program objectives. This is the only use of program income authorized by DOL.

The costs associated with generating program income may be charged against the SCSEP grant -- subject to the SCSEP cost limitations. For example, Title V funds may be used to buy materials used in making items which are offered for sale. Such funds would be charged to the "Other Enrollee Costs" category as an element of enrollee training.

In calculating the amount of program income reported to ETA, any costs of generating the income that have not been charged to Title V may be deducted from gross income received. The resulting amount would be the program income. All program income earned must be used to further Title V program objectives.

5. POLICY : Program income is to be used for the purpose of promoting the goals and objectives of the SCSEP. Unlike the SCSEP Federal grant dollars, program income expenditures are not subject to the percentage limitations for cost categories. Further, program income expenditures are reported as a "total". They are not categorized into the cost categories of Administration, Other Enrollee Costs, and Enrollee Wages and Fringe Benefits.

Program income generated but not spent during a grant year must be carried forward to the new grant year. Program income should be expended before Federal grant dollars.

Income earned in succeeding years from the same sources from which the program income was initially earned is not considered program income, however. For instance, a book printed and paid for with grant funds in one period may be sold in later grant periods and the funds generated in these later years would not be considered program income. Instead, these funds would be subject to none of the usual Federal requirements and need not be accounted for under SCSEP accounting guidelines.

6. ACCOUNTING AND REPORTING REQUIREMENTS: Program income must be separately accounted for on the grantee's books. It should be reported to DOL on lines 10r, 10s, and 10t of the SF 269 Financial Status Report. These are the lines used for reporting program income under the addition method. Since income earned after the end of the grant period is not considered program income, the grantee does not have to report such income on its SCSEP Financial Status Report. Any balance of unexpended program income carried forward from the previous grant year may be merged with program income received during the current period.

7. INQUIRIES: Questions should be directed to your Federal Representative at (202) 219-5904.



Chief Acting Director

Division of Older Worker Programs Office of National Programs



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