[Code of Federal Regulations]
[Title 7, Volume 4]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR247.25]

[Page 421-422]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 247_COMMODITY SUPPLEMENTAL FOOD PROGRAM--Table of Contents
 
Sec.  247.25  Allowable uses of administrative funds and other funds.

    (a) What are allowable uses of administrative funds provided to 
State and local agencies? Administrative funds may be used for costs 
that are necessary to ensure the efficient and effective administration 
of the program, in accordance with parts 3016 and 3019 of this title. 
Part 3016 of this title contains the rules for management of Federal 
grants to State, local, and Indian tribal governments, and part 3019 of 
this title contains the grants management rules for nonprofit 
organizations. These departmental regulations incorporate by reference 
OMB Circulars A-87 (Cost Principles for State, Local, and Indian Tribal 
Governments) and A-122 (Cost Principles for Non-Profit Organizations), 
which set out the principles for determining whether specific costs are 
allowable. For availability of OMB Circulars referenced in this section, 
see 5 CFR 1310.3. Some examples of allowable costs in CSFP include:
    (1) Storing, transporting, and distributing foods;
    (2) Determining the eligibility of program applicants;
    (3) Program outreach;
    (4) Nutrition education;
    (5) Audits and fair hearings;
    (6) Monitoring and review of program operations; and
    (7) Transportation of participants to and from the local agency, if 
necessary.
    (b) What are unallowable uses of administrative funds? In addition 
to those costs determined to be unallowable by the principles contained 
in the OMB circulars referenced in paragraph (a) of this section, 
specific examples of unallowable uses of administrative funds in CSFP 
include:
    (1) The cost of alteration of facilities not required specifically 
for the program; and
    (2) Actual losses which could have been covered by permissible 
insurance (through an approved self-insurance program or by other 
means).
    (c) What costs are allowable only with prior approval of FNS? 
Capital expenditures, which include the acquisition of facilities or 
equipment, or enhancements to such capital assets, with a cost per unit 
of at least $5,000, are allowable only with prior approval of FNS. 
Examples of equipment include automated information systems, automated 
data processing equipment, and other computer hardware and software.
    (d) What procedures must State and local agencies use in procuring 
property, equipment, or services with program funds, and disposing of 
such property or equipment? The procedures that State and local agencies 
must follow in procuring property, equipment, or services with program 
funds, or disposing of such property or equipment, are contained in 
parts 3016 and 3019 of this title. State, local, and Indian tribal 
governments must comply with part 3016 of this title, while nonprofit 
subgrantees must comply with part 3019 of this title. State and local 
agencies may use procurement procedures established by State and local 
regulations as long as these procedures do not conflict with Federal 
regulations. Federal regulations do not relieve State or local agencies 
from responsibilities established in contracts relating to procurement 
of property, equipment, or services. The State agency is the responsible 
authority regarding the settlement of all contractual and administrative 
issues arising out of procurements for the program.
    (e) What is program income and how must State and local agencies use 
it? Program income is income directly generated from program activities. 
It includes, for example, income from the sale of packing containers or 
pallets, and the salvage of commodities. Program income does not include 
interest earned from administrative funds. State and local agencies must 
use program income for allowable program

[[Page 422]]

costs, in accordance with part 3016 of this title.
    (f) How must State and local agencies use funds recovered as a 
result of claims actions? The State agency must use funds recovered as a 
result of claims actions against subdistributing or local agencies in 
accordance with the provisions of Sec.  250.15(c) of this chapter. The 
State agency must use funds recovered as a result of claims actions 
against participants for allowable program costs. The State agency may 
authorize local agencies to use such funds for allowable program costs 
incurred at the local level.