Each CFSA and WIA area shall develop a written policy for the reimbursement of the costs of CFSA/WIA area assets that complies with state, federal, and local requirements and includes asset classification standards and a useful life schedule. The CFSA and WIA area shall follow the state and federal requirements unless local requirements are more restrictive. The policy shall be consistent with the practices reflected in the county's comprehensive annual financial report (CAFR) or other local annual financial reports, and meet requirements for reasonableness, allowability, and allocability as outlined in office of management and budget (OMB) circular A-87 and 2 C.F.R. part 225. A CFSA or a WIA area may adopt the written policy of the county auditor when the county auditor's policy is, at minimum, as restrictive as the federal requirements. When a WIA area is composed of workforce development agencies from multiple counties, the WIA area shall follow the most restrictive of state, federal, and local requirements when seeking federal or state reimbursement for an asset.
(A) Expensing, depreciation, and use allowance are the three methods of asset reimbursement that can be utilized for claiming federal financial participation. An item with an acquisition cost of less than five thousand dollars is considered a supply and is expensed as a direct or indirect charge. Unless local requirements are more restrictive, when seeking federal reimbursement for the costs of an asset with an acquisition cost of five thousand dollars or more, the cost shall be recovered through depreciation or use allowance as an indirect cost. The only exception to the capitalization threshold is established in paragraph (B) of this rule and applies to equipment that will only benefit programs supported solely by United States department of labor (DOL) funds in WIA areas that are not covered by more restrictive local requirements.
(B) A local WIA area may direct charge equipment with an acquisition cost of more than five thousand dollars as an expense with prior written approval from the Ohio department of job and family services (ODJFS).
(1) A local area shall request such approval by submitting a completed JFS 01994 "Request for Approval to Direct Charge Workforce Investment Act (WIA) Area Funds for Equipment" (3/2009). The ODJFS review criteria include the following items:
(a) The existence of any local requirements, either at the WIA area or at the county level if the WIA area is acting on behalf of a county workforce development agency.
(b) The purchase of the equipment must meet the standard federal guidelines of reasonableness and allowability.
(c) The proposed methodology of allocating the costs between the adult, dislocated, and youth grants, and any administration costs must ensure the grants are charged in accordance with relative benefits received.
(d) All supporting documentation required on the JFS 01994.
(2) ODJFS will provide additional guidance on a case-by-case basis for approved requests to expense and direct charge the cost of equipment, including timing of the direct charge and reporting of the expenditure.
(C) Depreciation and use allowances are means of allocating the cost of fixed assets to periods benefiting from the asset's use. In accordance with OMB circular A-87 attachment B, section 11(a) and 2 C.F.R. part 225, appendix B, section 11(a), a combination of the two methods may not be used in connection with a single class of fixed assets (e.g., buildings, office equipment, computer equipment, etc.) unless the asset is considered to be fully depreciated and approval of a use allowance is obtained in accordance with the process outlined in paragraph (K) of this rule.
(D) The calculation of depreciation or use allowances shall be based on the acquisition cost of the assets involved. Where actual cost records are not available, CFSAs and WIA areas shall determine the acquisition cost in accordance with section (11)(b) of OMB circular A-87 (2 C.F.R. part 225, appendix B, section 11(b)).
The value of an asset donated to the CFSA by an unrelated third party shall be its fair market value at the time of donation. Government or quasi-governmental organizations located within the same county shall not be considered unrelated third parties for this purpose.
(E) The calculation of depreciation or use allowance shall exclude:
(1) The cost of land;
(2) Any portion of the cost of buildings and equipment borne by or donated by the federal government irrespective of where the title was originally vested or where it presently resides; and
(3) Any portion of the cost of buildings and equipment contributed by or for the CFSA or WIA area in satisfaction of a matching requirement.
(F) When a CFSA or WIA area is following the depreciation or use allowance method, it shall determine the period of useful service (useful life) for the assets being depreciated. Unless the county can document clearly that expected consumption of the asset will be significantly greater in the early portions of the useful life of the asset than in the later portions, the straight line method of depreciation shall be used. In determining the useful life of assets, the following factors must be considered:
(1) Type of construction;
(2) Nature of the equipment used;
(3) Historical usage patterns;
(4) Technological developments; and
(5) The renewal and replacement policies of the local government entity for the individual items or classes of assets involved.
(G) Depreciation methods shall not be changed unless approved by the (ODJFS). The CFSA or WIA area shall submit all requests to change the method of depreciation to the ODJFS fiscal supervisor. All requests shall include no less than the following information:
(1) The useful life of the item;
(2) The history of the method of costing that has been used for the life of the asset; and
(3) The reasoning behind the request to change the asset reimbursement method.
(H) In the event that the depreciation method is approved for an asset previously subject to a use allowance, the annual depreciation cost may not exceed the amount that would have resulted had the depreciation method been in effect from the date of acquisition of the asset. The combination of use allowances and depreciation applicable to the asset shall not exceed the total acquisition cost of the asset or fair market value at time of donation.
(I) The CFSA or WIA area has two options for cost recovery when the depreciation method is used for buildings.
(1) The building's shell may be segregated from the major components of the building (e.g., plumbing system, heating, air conditioning system, etc.) and each major component depreciated over its estimated useful life; or
(2) The entire building (i.e., the shell and all components) may be treated as a single asset and depreciated over a single useful life.
(J) If a CFSA or WIA area utilizes the use allowance for buildings and improvements (including land improvements, such as paved areas, fences, and sidewalks), use allowance shall be calculated at an annual rate not to exceed two per cent of the acquisition costs.
(1) When the use allowance method is used for a building, the entire building must be treated as a single asset; the building's components (e.g., plumbing system, heating, air conditioning system, etc.) cannot be segregated from the building's shell.
(2) The two per cent limitation does not apply to equipment that is not permanently fixed to the building and is used as furnishings, decorations, or used for specialized purposes.
(a) Such equipment shall be considered as not being permanently fixed to the building when it can be removed without the destruction of, or need for costly or extensive alterations or repairs to the building, or the equipment.
(b) The use allowance for equipment will be computed at an annual rate not to exceed six and two-thirds per cent of the acquisition cost.
(K) The CFSA or WIA area may request approval to report a reasonable use allowance for assets that are considered to be fully depreciated by contacting the ODJFS fiscal supervisor. ODJFS approval shall be based on the following factors:
(1) The amount of depreciation previously charged to the government;
(2) The estimated useful life remaining at the time of the determination;
(3) The effect of any increased maintenance charges;
(4) Decreased efficiency due to age; and
(5) Any other factors pertinent to the utilization of the asset.
(L) Charges for use allowances or depreciation must be supported by adequate property records. When the depreciation method is followed, depreciation records indicating the amount of depreciation taken each period must also be maintained.
(M) To receive reimbursement for assets by using the depreciation or use allowance method, the CFSA or the WIA area shall report the appropriate amount on the applicable monthly financial statement.
(1) County departments of job and family services shall use the JFS 02827 "Monthly Financial Statement-Public Assistance Fund Certification Sheet" (rev. 11/2000).
(2) Public children services agencies shall use the JFS 02820 "Monthly Financial Statement-Children Services Fund" (rev. 3/2004).
(3) Child support enforcement agencies shall use the JFS 02750 "Child Support Administrative Fund Monthly Financial Statement" (rev. 10/2005).
(4) Workforce investment areas shall use the JFS 01992 "Workforce Investment Act (WIA) Fund Certification Sheet Monthly Financial Statement" (rev. 4/2006).