FSO determines who will be reviewed based on the fiscal year's risk assessment. The risk assessment takes into consideration factors including the size of the award(s), a grantee's single audit results, historical fiscal compliance, the latest fiscal review findings, and the amount of DSHS funding. In addition, it is our goal to review every DSHS grantee at least once during a four to five-year cycle.

Direct costs are costs that can be specifically or readily identified with a specific cost objective or program. For example, a tobacco prevention grant's direct activity would be the dissemination of tobacco-danger information to youth, organizing high school students to speak at elementary and middle schools, etc.

Indirect costs are costs necessary for the effective and efficient operation of a grant but cannot be readily identified to a specific cost objective or program without effort disproportionate to results achieved. Examples of indirect activities are employees performing general office duties and shared costs such as copier rental costs, utilities, etc.

The DSHS Contractor's Property Inventory Report (GC-11) spreadsheet contains a separate tab with general information and instructions. Grantees must submit a GC-11 form by October 15th to FSOequip@dshs.texas.gov every year. Grantees may also submit any questions about the process to this mailbox.

All dispositions should be sent to: DSHSDocusign@dshs.texas.gov.

Contact your Contract Manager (CM) via email with all the details. The CM will evaluate the request per the American Hospital Association manual to assess the useful life of the item and the nature of the disposition. In instances that the asset is sold, and a salvage value is obtained, this value must be reported as program income to the grant, or if the grant no longer exists, repaid to DSHS. The item can also simply be returned to DSHS. If the item has been stolen, the grantee must produce a police report as support. In any instance, the item must be reported in the Property Inventory Report for one additional year with the disposition date in the appropriate column. Once approved, the CM will contact the grantee with a form to complete.

Cost Allocation assigns costs that benefit more than one program to funding sources by relative benefit. This means that if one program uses more of a shared resource, a higher percentage of the cost should be assigned to that program. For example, if one program uses four offices in a building used by multiple programs while another uses two offices, all equal size, the first program will pay a higher percentage for common areas such as the lobby and break room.

The method used should be reasonable for the type of cost. For example, building space is commonly allocated by square footage but this would not be a reasonable method for salaries. Cost allocation presents challenges in a clinic setting. One methodology that can be used for clinics when multiple grants are benefiting from the clinic's activities is the patient census. This method uses the ratio of patients receiving services under a particular program to the total number of patients receiving services under all programs.

Budgeted amounts – Basing charged expenditures and payroll based on what is budgeted for the grants (also known as "percentage of funding") is not acceptable. Budgets are targets but do not reflect what actually occurs.

Even Splits – An even split requires a sufficient and reasonable written explanation. If these two grants each had the same number of full-time employees and their usage of supplies was similar, then an even split may be considered an acceptable methodology for allocating the cost of supplies. For example, if a grantee has 2 grants with DSHS and purchases supplies that benefit both programs, it is not acceptable to split the costs 50/50 for no other reason than there are two grants. Similarly, if an employee works on 3 grants, a 1/3 split of hours worked would not be acceptable.

No established methodology – Charges based on available funds, or the amount of money available in the fiscal year.

• Contract Provisions: DSHS contracts may include specific unallowable costs for a particular program(s). If a cost is specifically listed as unallowable in the contract, this takes precedence over other criteria.
• 2 CFR 200: To deliver on the promise of a 21st-Century government that is more efficient, effective, and transparent, the Office of Management and Budget (OMB) has streamlined the Federal government's guidance on Administrative Requirements, Cost Principles, and Audit Requirements for Federal awards. UGMS was developed under the authority of Chapter 783 of the Texas Government Code, to promote the efficient use of public funds in local government and programs requiring cooperation among local, state, and federal agencies. Health and Human Services (HHS) has codified the OMB language, with minor modifications, for federal grants awarded in 45 CFR Part 75.
• Uniform Grant Management Standards: The Uniform Grant Management Standards were established to promote the efficient use of public funds by providing awarding agencies and grantees a standardized set of financial management procedures and definitions, requiring consistency among grantor agencies in their dealings with grantees, and by ensuring accountability for the expenditure of public funds. State agencies are required to adhere to these standards when administering grants and other financial assistance agreements with cities, counties, and other political subdivisions of the state. The grants beginning on Jan 1st, 2022, and onwards will follow the Texas Grant Management Standards, which are replacing UGMS.
• Other applicable criteria include, but are not limited to, Generally Accepted Accounting Principles (GAAP) and specific Federal program requirements.

Program income is gross income earned by a recipient, a consortium participant, or a contractor under a grant that was directly generated by the grant-supported activity or earned as a result of the award.

“Program income must be used for the purposes and under the conditions of the Federal award.” 45 CFR § 75.307

• Conference or workshop participant registration fees.
• Income from sales of educational materials.
• Sale of equipment that was purchased with grant funds.
• Fees, payments, or reimbursement for the provision of a specific service, such as patient care reimbursements received under Medicare, Medicaid, or Children’s Health Insurance Program.

• Direct costs, such as personnel, fringe benefits, staff travel, contractual services.
• Allowable administrative costs include usual and recognized overhead (including indirect rates for all organizations).
• Per the grant contract, program-specific outreach is allowable.

No, non-federal entities are encouraged to earn income to defray program costs where appropriate (45 CFR § 75.307 Program income).

340B is a federal drug pricing program where the manufacturer provides a discounted price to covered entities. Its goal was to provide covered entities with additional savings that will fund additional services that will benefit patients.

Yes, all 340B generated revenue is considered program income. When an entity is 340B eligible and purchases pharmaceuticals via 340B pricing under multiple awards, the recipient must use a reasonable allocation method for the attribution of costs and program income and be able to document the methodology used.

Under the additive alternative, program income is added to the Federal award and must be used for the purposes and under the conditions of the Federal award. Please note that this does not result in a separate or additional notice of the grant award. See 45 CFR 75.307.

• Program income must comply with grant conditions, State and Federal regulations ( Centers for Disease Control, 2020).
• Program income must be spent during the contract term it is earned and not allowed to be carried over to the next term, except with an approved spending plan (45 CFR 75).
• All program income must be disbursed before requesting additional grant payments (TxGMS and 45 CFR 75.307).
• Program income must be used for the purposes of the Federal award. (45 CFR 75.307)

• Program income should have a separate cost center established in the grantee’s General Ledger.
• Program income should be able to be identified by the grant in which it was generated.
• appropriate allocation methodology and allocation work must be shown when there are multiple funding streams.
• Retain invoices and payments for billing.
• Readily available for third-party reviewers.