Allowable Expenses

Purpose

This document provides clarification on the eligibility of specific expenditures for reimbursement under the Public Charter Schools Grant Program (PCSGP). The information provided here is not comprehensive, but does cover some of the more frequently occurring costs found in the grant program.

If you have questions about a specific item of cost that is not described here, please contact a member of PCSGP staff by phone at 916-322-6029, or by email at charters@cde.ca.gov.

Federal Guidance

Federal guidance pertaining to allowable costs under the PCSGP may be found in the following documents:

• Elementary and Secondary Education Act (ESEA)

• U.S. Department of Education (ED) Charter Schools Program (CSP) Nonregulatory Guidance

• Office of Management and Budget (OMB) Circular A-21, Cost Principles for Educational Institutions

• OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments

• OMB Circular A-122, Cost Principles for Non-Profit Organizations

Factors Affecting Eligibility for Reimbursement

There are a number of factors that contribute towards the allowability of an expense. Developing an understanding of these principles will aid you in allocating expenses to the grant when the eligibility of an expense is not clear, or when an allocated expense is called into question and there is a need to obtain clarification. The factors are as follows:

Grant funds are intended to supplement, not supplant, state or local funds.

Supplanting is the use of PCSGP funds to pay for costs that would normally be paid using state or local funds. This primarily includes the operational costs of the school, such as rent and teacher salaries.

Federal nonregulatory guidance (D-3) indicates: “If the charter school can show that the state or local funds it has received are necessary to meet expenses other than the one at issue, then the charter school has met its burden of showing that the “other initial operational costs” cannot be met from state or local sources and, therefore, is allowable under the CSP grant.”

Costs incurred must correlate to a grant objective or a Work Plan objective.

The purpose of the PCSGP grant is to foster the development of high-quality charter schools in California. The Work Plan is the medium by which applicants propose activities with measurable outcomes that will enhance the quality of their school.

Other grant objectives include: informing the community about the school; and acquiring necessary equipment, educational materials, supplies, and curriculum. 

Costs incurred must be one-time in nature and may not include ongoing operational costs.

When making the distinction between one-time and ongoing costs, it is helpful to ask the following questions:

Is the expense required to operate the school?

Will the school continue to incur the expense after the grant has ended?

Answering “yes” to either of the above questions most likely indicates that the expense is not one-time in nature, and is most likely not allowable.

Costs incurred must be obligated during the grant project period.

Costs must be incurred during the grant project period in order to be eligible for reimbursement. Therefore, costs related to developing the charter petition or for services rendered beyond the duration of the grant project period are not allowable.

Purchases or contracts for goods and services must follow pertinent procurement regulations.

Procurement regulations ensure the appropriate use of federal funds, prevent conflicts of interest, and promote open competition between vendors offering similar goods and services. Most, if not all, purchases under the grant must comply with appropriate procurement regulations. You may find additional information on procurement in Appendix C of the 2010–2015 PCSGP Request for Applications (available upon request via email to charters@cde.ca.gov).

All purchases must be reasonable and necessary to the completion of the grant objectives or the initial operation of the school.

Goods and services purchased using grant funds should correlate to some need reflected in the approved charter petition or the approved Work Plan in the grant application. Expenses will be questioned if they appear to be unreasonable or unnecessary to the essential operation of the charter school or the completion of the grant objectives.