1. Purpose.To provide additional guidance on the allowable use of administrative funds made available for administering the TEUC Program and to modify the treatment of TEUC administrative funds in the RJM submission.
2. Reference. The TEUC Act of 2002, Public Law 107-147; Unemployment Insurance Program Letter (UIPL) No. 17-02 Change 1; OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments.
3. Background.
The TEUC Act of 2002 appropriated funds for administration of the TEUC program; therefore, the costs of administration must be accounted for separately. UIPL 17-02 Change 1 stated that state workforce agencies (SWAs) were to establish a separate fund ledger and submit a separate SF 269 for the TEUC program.
Because the administrative costs for TEUC were viewed primarily as variable, such as additional staffing costs to process the additional claims, an initial decision was made to exclude them from RJM data submissions. This policy was designed to ensure that RJM data submissions reflected the cost of administering the regular UI program and has been articulated at RJM training sessions.
4. Allowable Uses of TEUC Funds.Previous advisories did not describe the specific charges that SWAs could submit on the separate SF 269. In response to questions from SWAs, the Department has determined that a portion of TEUC funds can be used to support infrastructure/overhead costs (i.e., non-personal services, Administrative Staff and Technical Services (AS&T), and Support) that will continue after expiration of the TEUC program. Since implementation and operation of the TEUC program benefits from the existence of the UI program's infrastructure, OMB Circular A-87 cost allocation principles permit the charging of use of that infrastructure to the TEUC fund ledger. Therefore, administrative costs of the TEUC program for which funding can be claimed are not limited to variable costs such as additional staff hired to process TEUC claims but may include infrastructure and overhead costs that can be legitimately associated with the TEUC program. For example, a share of facilities and computer costs that support the TEUC program, as well as the regular UI program, can be charged as administrative costs of the TEUC program. In determining charges, OMB Circular A-87 cost allocation principles must be adhered to, and administrative charges should not exceed obligational authority.
| RESCISSIONS | EXPIRATION DATE |
| None | April 30, 2004 |
5. RJM Instructions.Consistent with the allowable uses of TEUC funds described above, that portion of state TEUC costs that are charged to infrastructure/overhead consistent with OMB Circular A-87 cost allocation principles should be included in RJM data submissions. TEUC workloads, staff time to process TEUC claims, and other TEUC variable costs will continue to be excluded from RJM data. Details are provided below.
- Non-Personal Services (NPS).The RJM 2 worksheet should include the total estimated NPS costs for the UI program for FYs 2002, 2003, 2004 and 2005. Beginning in March 2002, states have operated two different programs (UI and TEUC) and accounted for the costs of these programs in separate fund ledgers. Each program incurred NPS costs as a result of operating that specific program. These costs consisted of both direct program charges as well as indirect charges. Some of the costs would have been incurred even if there were only a UI program; after the TEUC program expires, these costs will have to be entirely funded by the UI grant. These costs should be included in the estimated costs on the RJM 2 worksheet.
Costs for each NPS category and minor object code on the CROSS TEUC NPS worksheet will have to be analyzed to determine which are continuing and which are one-time. Most of the continuing costs would be a result of prorated costs between the programs. For example, if the FY 2002 total facilities cost was $500,000 and the UI and TEUC programs were charged $450,000 and $50,000, respectively, the total cost of $500,000 will have to be funded by the UI grant after the TEUC program expires. If the $50,000 charged to TEUC had consisted of $30,000 continuing cost and $20,000 of a special facility leased for six months to process TEUC claims, then the total continuing cost would be $480,000.
To ensure that there is equitable treatment of these costs, states must document any increase in their NPS costs that exceed three percent in TAB 11, NPS INC of their notebooks. Documentation should show the total costs of the minor object code and the distribution of which of these costs are continuing and which were one-time costs of operating the TEUC program.
- Personal Services (PS) and Personnel Benefits (PB). The following procedure applies only to the Support and AS&T functional activities. PS and PB costs for Support and AS&T that were charged to the TEUC program, which would have otherwise been charged to the UI program, can be included in the RJM. States are required to review those costs that are totaled on the TEUC CROSS PSPB worksheet, cells G9, H9, I9, J9, AQ9, AR9, AS9, and AT9 and determine which of these costs would have been charged to the UI program in the absence of the TEUC program. Specific attention should be given to ensure that programming and training associated with TEUC are excluded.
Once the net of these costs have been calculated, insert an additional row on the CROSS PSPB worksheet labeled "TEUC ADJUSTMENT" (column A) and make the appropriate entries in columns C, D, E, F, G, H, I, J, AQ, AR, AS, and AT. Enter the total cost of the TEUC program on row 11 of the ACCT SUM worksheet; enter on row 40 the total cost of the TEUC program less those costs that were added on CROSS PSPB labeled "TEUC ADJUSTMENT".
In TAB 4 PSPB CROSS of the notebook, the state is to provide a detailed explanation of the TEUC costs that were included and excluded for AS&T and Support.
- Remote Claims Grants.All of these costs are to be excluded from the RJM 2 worksheet since funding for these activities have already been allocated.
6. Action. SWAs are asked to provide this information to appropriate staff.
7. Inquiries. Questions should be addressed to the respective Regional Offices.