The following expenses are non-reimbursable:
- Legal expenses other than for general consultation are unallowable. This exclusion applies to legal expenses for the prosecution and defense of claims. Legal expenses paid on either an hourly or retainer basis for general consultation are allowable.
- Fringe Benefits such as stipends, incentives compensation such as cost reductions and special awards.
- Expenses for direct treatment by medical (i.e., physicians and psychiatrists) or other specialists are unallowable except where;
- the expense is incurred for the diagnosis and evaluation of students for the purpose of developing an education program
- such specialists act in an advisory capacity to the school staff.
Generally, it would be expected that specialist services would be rendered on a consulting basis whereby payments would be made on an individual contract or retainer basis.
The cost of maintaining first-aid services, including the salary of a school nurse whose
responsibilities include administering first-aid and referring students for medical treatment is allowable.
Where certain facility salaries and wages are determined to be unallowable, the portion of fringe benefits and payroll taxes associated with those salaries should also be determined and reported as unallowable.
- Bad debts, including losses arising from uncollectable customers’ accounts and other claims, and related legal expenses, are unallowable.
- The imputed value of donated goods and services is not an allowable expense.
- Amounts transferred to contingency expense reserves or any similar provision for unforeseen events are unallowable.
- Contributions, donations, awards and scholarships are not reimbursable.
- Entertainment costs for amusement, social activities and incidental costs relating thereto, such as meals, beverages, lodgings, rentals, transportation and gratuities, are not allowable. These exclusions should not be construed to apply to student activities (i.e., field trips and other special education expenses where the activities are considered to be part of the education program).
- Fines and penalties resulting from violations of, or failure to comply with federal, state, and local laws and regulations are unallowable.
- Investment expenses related to a facility’s investment program including counsel, staff and other investment related expenses are unallowable. Gains and losses on sales of investments are also unallowable.
- Losses on the sales of capital assets (land, buildings, furniture, fixtures and equipment) are unallowable.
- Dividends paid to shareholders are unallowable.
- Fund raising expenses are unallowable. All activities that have as their purpose the raising of capital or obtaining contributions are considered to be fund raising. Expenses include salaries of staff, employee business expenses for travel, lodging and entertainment associated with fund raising and that portion of advertising, printing, mailing and shipping costs for fund raising activities.
- Research and development expenses are allowable only to the extent that they are incurred to maintain or improve existing special education programs. Research and development for new special education programs is not allowable.
- Interest charges on borrowed capital and installment purchases are allowable up to two points above the prime interest rate on the date of the loan. Interest cost exceeding this limit is unallowable.
- Legislative expense, i.e., expense incurred for lobbying activities, are unallowable.
- Intangible costs, i.e., goodwill, patent or copyright costs, are unallowable.
In addition to the above listed unallowable expenses, certain other transactions must be netted against operating expenses to arrive at the allowable expense amount:
- Applicable credits to operating expenses. The term “applicable credits” refers to those receipts or negative types of transactions, which operate to offset or reduce expense items. Typical examples of such transactions are: purchase discounts, rebates or allowances; recoveries or indemnities on losses; adjustments of overpayments or erroneous charges; and revenue from incidental activities, i.e., sales of supplies or publications produced by the facility.
- Monies received in the form of federal, state or local government assistance must be offset against the reported expenses to which the assistance was applied.
The applicable portion of any income, rebate, allowance or other credit relating to any allowable expense received by a facility must be credited to that expense.