Federal Assistance Manual Chapter 1-420

CHAPTER 1-420 PROGRAM INCOME

• 1-420-00 Purpose
  
• 1-420-10 Background
  
• 1-420-20 OSM Policy
  
• 1-420-30 Records

1-420-00 PURPOSE

1. This chapter outlines OSM policies on the disposition of program income generated by OSM grant- related activities.

2. The requirements for program income are outlined in the Grants Management Common Rule (43 CFR 12, Subpart C).

1-420-10 BACKGROUND

1. Grantees are encouraged to earn income to defray program costs. Such income may result from activities integrally related to the grant or from activities which are only incidental to the main purpose of the grant. Income may accrue from activities of the recipient organization or from services provided by an individual performing under the grant. It may result from grant supported activities which are intended to become self-supporting in the future, as well as from activities which are not so intended.

2. Examples of income resulting from grant supported activities are listed below, but are not to be considered all-inclusive:
   1. Sale of products, e.g., publications.

   2. Fees for services performed and fees for the sale of services, e.g., the sale of computer time.

   3. Rental of real or personal property acquired with OSM grant funds.

   4. Income received from permit fees.

   5. Revenue from the sale of land or surplus property.

   6. Insurance premiums received under the Subsidence Insurance program.

3. Income from fines, penalties and forfeitures collected by the recipient are not be considered Program Income. Such receipts should be held by the State to further the improvement in quality of life and environmental activities in the State.

1-420-20 OSM POLICY

1. General
   1. The recipient is accountable to OSM for the gross income received by the grantee, directly generated by a grant supported activity or earned only as a result of the grant agreement, during the grant period. That accountability may be satisfied by disposition in accordance with one of the following:
      1. Program income from all sources must be reported. Records of grant-related income are to be kept in the same manner as required for funds provided by the grant.

      2. Program income funds are to be used to further the purposes of the grant program for which the award was made; provided, however, that no unallowable costs such as entertainment or interest costs may be defrayed by the program income funds.

   2. Proceeds from the sale of real and personal property, either provided by OSM or purchased in whole or in part with Federal funds, shall be handled in accordance with Chapter 1-410.

   3. Any program income which exceeds the State's share of project costs shall be deducted from the Federal share.

   4. Applicable credits are not grant related income but rather reductions of expense. The Federal share of such credits shall be applied to reduce the portion of the expense chargeable to the grant.

   5. Tuition and related fees received by an institution of higher education for a regularly offered course taught by an employee performing under a grant shall not be treated as grant related income.

2. OSM Policy for Disposition of Income Earned on a Title V (Regulatory) Grant
   1. For grants with a cost sharing or matching requirement (i.e., OSM funds only a portion of the total program cost), the grantee shall use the income to meet the grantee's cost sharing or matching requirement of the grant agreement (cost sharing option).

   2. For grants with no cost sharing or matching requirement (i.e., OSM funds the total program cost), the income earned shall be deducted from the total allowable costs to determine OSM's net costs (deductive option).

   3. When a grant includes activities/functions with different matching requirements, the income earned shall be disposed of in accordance with the percentage used in the grant application to determine the final grant amount.

      When an A&E grant (50/50 matching requirement) also includes Federal lands activities (100% OSM funded), at the time of application, the grantee shall determine and justify the percent of the total grant request which will be used to fund the A&E and the Federal lands portions of the grant. That percentage will be used throughout the grant to determine the portion of the program income to be applied to the A&E and the Federal lands portions of the grant.

   4. For income resulting from permit fees paid to the State by coal mine operators, the State at its option may either report all of the fees it received in the current grant or equally distribute the fee income to the regulatory grants in effect during the duration of the approved permit.

   5. Considering all sources of funds accruing to the grantee as a result of a regulatory grant (Federal grant funds, permit fees, etc.), the grantee shall not realize a "profit" by receiving more income than its cost sharing requirement for operating the regulatory program during the period of the grant.

3. OSM Policy for Disposition of Income Earned on a Title IV (AML) Grant
   1. Program income includes any user charge imposed on or for land reclaimed pursuant to Title IV of SMCRA, after expenditures for maintenance have been deducted.

   2. Donations by persons, corporations, associations and foundations for the purpose of this title shall be accounted for.

   3. Except as noted in 4. below, income earned on AML grants shall be deducted from the total allowable costs to determine OSM's net costs (deductive option).

   4. The objectives of the Subsidence Insurance Grant are to establish, administer and operate a self-sustaining, individual grantee administered programs to insure private property against damages caused by land subsidence resulting from underground coal mining.

      Insurance premiums collected under the grant shall be added to the funds committed to the grant by OSM and used to further eligible subsidence insurance program objectives (additive option). Insurance premiums shall be considered disbursed as soon as the grantee determines how the funds will be used to further the objectives of the grant.

1-420-30 RECORDS

Adequate financial records of program income receipt and disposition must be maintained in order that such income may be tracked and audited.

FEDERAL ASSISTANCE MANUAL
January 2, 1998