oversight

The City of Hawthorne, CA, Did Not Administer Its Community Development Block Grant Program Cost Allocations in Accordance With HUD Rules and Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2013-09-20.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

OFFICE OF AUDIT
REGION 9
LOS ANGELES, CA




                  City of Hawthorne, CA

    Community Development Block Grant Program




2013-LA-1010                              SEPTEMBER 20, 2013
                                                        Issue Date: September 20, 2013

                                                        Audit Report Number: 2013-LA-1010




TO:            William Vasquez, Director, Los Angeles Office of Community Planning and
               Development, 9DD

               ///SIGNED///

FROM:          Tanya E. Schulze, Regional Inspector General for Audit, Los Angeles Region,
               9DGA


SUBJECT:       The City of Hawthorne, CA, Did Not Administer Its Community Development
               Block Grant Program Cost Allocations in Accordance With HUD Rules and
               Requirements


    Attached is the U.S. Department of Housing and Urban Development (HUD), Office of
Inspector General (OIG), final results of our review of the City of Hawthorne’s Community
Development Block Grant and Community Development Block Grant-Recovery Act Programs.

    HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.

    The Inspector General Act, Title 5 United States Code, section 8L, requires that OIG post its
publicly available reports on the OIG Web site. Accordingly, this report will be posted at
http://www.hudoig.gov.

   If you have any questions or comments about this report, please do not hesitate to call me at
213-534-2471.
                                           September 20, 2013
                                           The City of Hawthorne, CA, Did Not Administer Its
                                           Community Development Block Grant Program Cost
                                           Allocations in Accordance With HUD Rules and
                                           Requirements


Highlights
Audit Report 2013-LA-1010


 What We Audited and Why                    What We Found

We initiated a review of the City of       The City did not adequately support its cost allocations
Hawthorne’s Community Development          to its CDBG program activities in accordance with
Block Grant (CDBG) and CDBG-               applicable HUD rules and requirements. It was unable
Recovery Act (CDBG-R) program,             to properly support more than $1.6 million in
based on a request by the U.S.             employee salaries allocated to its CDBG program
Department of Housing and Urban            activities, incurred $34,028 in ineligible CDBG
Development’s (HUD) Los Angeles            program costs, and incurred $12,733 in unsupported
Office of Community Planning and           CDBG program expenses.
Development. Our objective was to
determine whether the City adequately      We found no issues with the City’s use of its CDBG-R
supported its salary and program           program funds.
administrative cost allocations to the
CDBG and CDBG-R programs in
accordance with HUD requirements.

 What We Recommend

We recommend that the Director of
HUD’s Los Angeles Office of
Community Planning and Development
require the City to (1) provide adequate
support for more than $1.6 million in
salary costs or repay the CDBG
program from non-Federal funds, (2)
repay the program $34,028 in ineligible
administration expenses from HOME
Investment Partnerships program funds,
(3) provide support for $12,733 in
administration costs or repay the
program from HOME funds, (4)
develop written policies and procedures
for its salary and administrative
allocation, and (5) provide training to
CDBG employees on program
requirements.
                           TABLE OF CONTENTS

Background and Objective                                                       3

Results of Audit
      Finding: The City Did Not Administer Its CDBG Program Cost Allocations
               in Accordance With HUD Rules and Requirements                   5

Scope and Methodology                                                          8

Internal Controls                                                              10

Appendixes
A.    Schedule of Questioned Costs                                             12
B.    Auditee Comments and OIG’s Evaluation                                    13
C.    Criteria                                                                 15




                                           2
                      BACKGROUND AND OBJECTIVE

Incorporated in 1922, the City of Hawthorne has a population of nearly 87,000 within a 6-
square-mile area. There are several departments that help run the City, including the Planning
and Community Development department. Community Development is responsible for
administering the Federal Community Development Block Grant (CDBG) and HOME
Investment Partnerships Program.

CDBG Program
The CDBG program works to ensure decent, affordable housing, to provide services, and to
create jobs through the expansion and retention of businesses. Not less than 70 percent of
CDBG funds must be used for activities that benefit low- and moderate-income persons. In
addition, each activity must meet one of the following national objectives for the program:
benefit low- and moderate-income persons, prevent or eliminate slums or blight, or address
community development needs having a particular urgency because existing conditions pose a
serious and immediate threat to the health or welfare of the community for which other funding
is not available. The table below summarizes the funding awarded to the City’s CDBG and
CDBG-Recovery Act (CBDG-R) programs throughout our audit period.

  Program year     IDIS* #            Project activity                   Funding
      2010            1    Program administration                           $291,691
                      2    Graffiti removal                                 $108,427
                      3    Crime-free multifamily housing                   $108,427
                      4    Code enforcement                                 $449,432
                                       2010 subtotal                        $957,977
      2011          1      Program administration                           $317,746
                    7      Graffiti removal                                 $109,000
                    8      Crime-free multifamily housing                   $109,000
                    9      Code enforcement                                 $276,963
                                       2011 subtotal                        $812,710
      2012          2      Program administration                           $241,941
                    4      Graffiti removal                                 $109,000
                    5      Crime-free multifamily housing                    $31,656
                    6      Code enforcement                                  $50,069
                                       2012 subtotal                        $432,666
 CDBG                      Total CDBG                                     $2,203,353
                           Public facilities & improvements -
 CDBG-R                    economic development                             $459,958
                           Total CDBG and CDBG-R                          $2,663,311
* IDIS = HUD’s Integrated Disbursement and Information System

Additionally, HUD last conducted a monitoring review of the City’s CDBG program in July
2005. HUD issued findings on the City’s code enforcement program regarding eligibility;
specifically determining that (1) code enforcement activities were carried out citywide rather


                                                3
than in deteriorated or deteriorating areas, (2) program activities were carried out in ineligible
census tracts (non-CDBG areas) containing less than 51 percent low- and moderate-income
persons, and (3) HUD could not determine from code enforcement officer daily logs what
percentage of staff time was charged to the CDBG program. The City responded to the findings
in December 2005 by defining deteriorated or deteriorating areas using the City’s property
maintenance ordinance; defining the target areas or census tract or block groups containing a
majority of low- and moderate-income residents; and explaining how time was charged to the
CDBG program for each code enforcement staff person and how the determination was made,
including stating that each code enforcement officer reported actual time spent on CDBG
activities daily.

The objective of our audit was to determine whether the City adequately supported its salary and
program administrative cost allocations to the CDBG and CDBG-R programs in accordance with
HUD requirements.




                                                 4
                                RESULTS OF AUDIT


Finding: The City Did Not Administer Its CDBG Program Cost
         Allocations in Accordance With HUD Rules and
         Requirements
The City did not adequately support its cost allocations to its CDBG program activities in
accordance with applicable HUD rules and requirements. Specifically, it

      Did not properly support more than $1.6 million in employee salaries and benefits
       allocated to its CDBG program,

      Incurred $34,028 in ineligible program administrative costs, and

      Incurred $12,733 in unsupported program administrative costs.

This condition occurred because the City was not sufficiently knowledgeable of HUD
requirements and did not maintain adequate written policies and procedures for salary allocation
or program administration. As a result, more than $1.6 million in program funds may not have
been made available for decent, affordable housing and other services principally for low- and
moderate-income persons.


 The City Lacked Support for
 Salary Allocations


               The City did not have a sufficient basis for its allocation of employee salaries to
               its CDBG program activities. A sample review of employee timesheets for the
               City’s CDBG program activities for fiscal years 2011, 2012, and 2013 revealed
               that the time recorded by employees on their timesheets for CDBG activities
               directly corresponded to the City’s budgeted CDBG salary allocation plans, which
               are prepared before the fiscal year. Interviews with the City’s CDBG staff
               confirmed that employees recorded their CDBG work time to match the City’s
               budget allocation plan, rather than recording their actual work time. This method
               of recording and allocating time is contrary to HUD requirements at 2 CFR (Code
               of Federal Regulations) 225, Appendix B to 2 CFR 225 (8)(h)(4)-(5) (Office of
               Management and Budget Circular A-87), which call for after-the-fact distributions
               (see appendix C).

               This issue was apparent in the code enforcement program, for which the CDBG
               hours listed on timesheets matched those on the budgeted allocation plan. Yet the
               hours on computer system reports showing actual work time and activities did not
               support or match the time recorded on employee timesheets.


                                                5
           Further, there was no written methodology showing how the City derived the
           salary allocation percentages for its CDBG activities on its budgeted salary
           allocation plan. In addition, there were no adjustments made to the allocation to
           reflect the actual time spent working on CDBG activities. As a result, costs
           charged to CDBG salaries and associate benefits were considered unsupported.
           The total unsupported salaries and benefits for all CDBG program activities
           reviewed (that is, code enforcement, graffiti removal, crime-free multifamily
           housing, and program administration) amounted to more than $1.6 million
           ($692,694 for fiscal year 2011, $646,469 for fiscal year 2012, and $288,967 for
           fiscal year 2013).

The City Incurred Ineligible
and Unsupported Costs From
Program Administration
Expenses

           The City incurred $34,028 in ineligible expenses that should have been charged to
           other programs. Of this amount, $12,445 was paid for administrative contract
           services to develop a relocation policy manual, which was applied to recent
           properties for the HOME program. However, the City charged the entire cost to
           the CDBG program instead of charging the benefited HOME program.
           Additionally, the City incurred $20,993 in costs for relocation consultant services,
           reimbursement costs of $95 for travel expenses, and $495 in application fees for
           HOME and planning activities, respectively, but charged them to the CDBG
           program. HUD requirements under 2 CFR Part 225 (Office of Management and
           Budget Circular A-87) Appendix A to Part 225(C)(c) do not allow costs allocable
           to a Federal award to be charged to another Federal award.

           In addition, the City could not support $12,733 in CDBG program expenses.
           These expenses included

               (1) $3,750 for professional contract services to prepare the fiscal year 2010-
                   2011 consolidated annual performance and evaluation report (CAPER),
               (2) $910 to advertise the fiscal year 2010-2011 CAPER,
               (3) $6,000 for the preparation of the fiscal year 2011-2012 CAPER, and
               (4) $2,073 for the implementation of the City’s 5-year implementation plan.

           These costs should have been allocated between the CDBG and HOME programs
           in accordance with 24 CFR 570.206(a)(1-4), since the development of these
           reports provided information for both HUD programs. Instead, the City charged
           the entire amount to the CDBG program. The City had no written methodology
           for allocating these types of joint expenses between programs.




                                             6
The City Was Unaware of
Program Requirements


             City staff in charge of administering the CDBG program and performing the
             activities did not have sufficient knowledge of HUD requirements. In addition,
             the City did not develop a written plan or basis describing how salary allocations
             were determined for CDBG employees or maintain adequate policies and
             procedures for program administration.

Conclusion

             The City did not adequately support its cost allocations to its CDBG program
             activities in accordance with applicable HUD rules and requirements. This
             condition occurred because the City was not sufficiently knowledgeable of HUD
             requirements and therefore did not maintain adequate written policies and
             procedures for salary allocation or program administration. As a result, more than
             $1.6 million in program funds may not have been made available for decent,
             affordable housing and other services principally for low- and moderate-income
             persons.

Recommendations

             We recommend that the Director of HUD’s Los Angeles Office of Community
             Planning and Development require the City to

             1A.    Provide adequate supporting documentation for the $1,628,130 in
                    unsupported salary and benefit costs or repay the CDBG program from
                    non-Federal funds.

             1B.    Repay the CDBG program $34,028 in ineligible administration expenses
                    from HOME program funds.

             1C.    Provide support for $12,733 in unsupported administration costs or repay
                    the CDBG program from HOME program funds.

             1D.    Implement adequate written policies and procedures for its salary and
                    administrative allocations to meet applicable HUD rules and requirements.

             1E.    Provide adequate training to CDBG employees so that the employees have
                    a better understanding and knowledge of administering the CDBG
                    program in accordance with HUD rules and requirements.




                                              7
                        SCOPE AND METHODOLOGY

We performed our onsite audit work at the City’s main office in Hawthorne, CA, from January
28 to August 6, 2013. Our review generally covered the period July 1, 2010, to December 31,
2012, and was expanded as necessary.

To accomplish our objective, we

          Interviewed pertinent City personnel involved with the administration of CDBG
           funds and HUD Office of Community Planning and Development program staff;

          Reviewed Integrated Disbursement and Information System (IDIS) performance
           reports provided by HUD;

          Reviewed City monitoring reports, CDBG funding agreements, consolidated action
           plans, and CAPERs;

          Reviewed relevant purchasing, financial, and accounting procedures and records;

          Reviewed the City’s internal control policies and procedures;

          Reviewed documentation related to the City’s CDBG-funded projects;

          Reviewed the City’s organizational charts;

          Reviewed the City’s audited financial statements for fiscal years 2009, 2010, and
           2011; and

          Reviewed applicable CDBG regulations, including CFR references and Office of
           Management and Budget requirements.

To test CDBG program expenses, we selected a nonstatistical sample. According to HUD’s
IDIS reports, the universe of total CDBG expenditures that were expended and drawn during our
audit period amounted to $4,035,128. The expenditures sampled totaled $1,900,712 ($938,777 +
$401,451 + $560,484). The total percentage for each individual fiscal year amounted to 23
percent ($938,777 / $4,035,128) for 2010, 10 percent ($401,451 / $4,035,128) for 2011, and 14
percent ($560,484 / $4,035,128) for 2012. We sampled the program activities with the most
CDBG expenditures for each individual fiscal year. Further, each program activity is comprised
of several voucher or expenditure amounts, so we chose a specific voucher or expenditure to
review in detail (such as supporting documentation, invoices, canceled checks, contracts, etc.)
for that program activity. In total, we sampled 47 percent ($1,900,712 / $4,035,128) of the total
population of CBDG program expenditures.




                                                8
We reviewed the City’s budgeted salary allocation plans and timesheets for CDBG employees.
We reviewed salaries and benefits for the City’s CDBG program activities (code enforcement,
graffiti removal, crime-free multifamily housing, and program administration) within our audit
scope, from July 1, 2010, to December 31, 2012. We requested a nonstatistical sample of
employee timesheets for these program activities, to include examples for fiscal years 2011,
2012, and 2013, and compared the time allocated for CDBG activities to the City’s budgeted
salary allocation spreadsheets on a percentage basis to determine whether CDBG employees
recorded actual CDBG work time in accordance with HUD regulations. We determined that
further testing of timesheets was unnecessary since City staff confirmed that our observations
were consistent City practice.

Additionally, of the $459,958 in CDBG-R funds awarded to the City, we reviewed the entire
amount to ensure that expenditures were eligible and supported.

We found that data contained in source documentation provided by the City agreed with data
contained in the City’s automated expenditure reports. We, therefore, assessed the data to be
sufficiently reliable for our use during the audit.

We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.




                                                9
                              INTERNAL CONTROLS

Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to

      Effectiveness and efficiency of operations,
      Reliability of financial reporting, and
      Compliance with applicable laws and regulations.

Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program operations as well as the
systems for measuring, reporting, and monitoring program performance.


 Relevant Internal Controls

               We determined that the following internal controls were relevant to our audit
               objectives:

                  Effectiveness and efficiency of program operations - Implementation of
                   policies and procedures to ensure that program funds are used for eligible
                   purposes.

                  Reliability of financial information - Implementation of policies and
                   procedures to reasonably ensure that relevant and reliable information is
                   obtained to adequately support program expenditures.

                  Compliance with applicable laws and regulations - Implementation of policies
                   and procedures to ensure that monitoring, onsite inspections, and expenditures
                   comply with applicable HUD rules and requirements.

               We assessed the relevant controls identified above.

               A deficiency in internal control exists when the design or operation of a control does
               not allow management or employees, in the normal course of performing their
               assigned functions, the reasonable opportunity to prevent, detect, or correct (1)
               impairments to effectiveness or efficiency of operations, (2) misstatements in
               financial or performance information, or (3) violations of laws and regulations on a
               timely basis.




                                                 10
Significant Deficiency

            Based on our review, we believe that the following item is a significant deficiency:

               The City did not maintain sufficient written policies and procedures to ensure
                that cost allocations were adequately supported in accordance with HUD rules
                and requirements (finding).




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                                APPENDIXES

Appendix A

             SCHEDULE OF QUESTIONED COSTS

              Recommendation
                                       Ineligible 1/    Unsupported 2/
                  number

                     1A                                     $1,628,130
                     1B                    $34,028
                     1C                                        $12,733
                    Total                  $34,028          $1,640,863

    1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or
         activity that the auditor believes are not allowable by law; contract; or Federal,
         State, or local policies or regulations.

    2/   Unsupported costs are those costs charged to a HUD-financed or HUD-insured
         program or activity when we cannot determine eligibility at the time of the audit.
         Unsupported costs require the decision by HUD program officials. This decision,
         in addition to obtaining supporting documentation, might involve legal
         interpretation or clarification of departmental policies and procedures.




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Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation                         Auditee Comments

                   CITY OF HAWTHORNE
                                                      September 11, 2013

                   Via Facsimile (213) 894-8115, Email (tschulze@hudoig.gov)
                   & Regular U.S. Mail

                   Tanya E. Schulze
                   Regional Inspector General for Audit
                   U.S. Department, Housing & Urban Development
                   Office of Inspector General
                   611West 6th Street, Suite 1160
                   Los Angeles, CA 90017

                   Dear Ms. Schulze:

                   We write in response to the ‘City of Hawthorne CDBG & CDBG-R Finding
                   Outline' provided to us by you.

                   The City has reviewed the findings and recommendations made in the outline.
Comment 1          We are in the process of producing supporting documentation for the
                   $1,628,130 in salary costs flagged by the findings. The new supporting
                   documentation will be generated based on data collected in COMCATE
                   (the City's code enforcement management system) as well as other data
                   maintained by the City. These data sources constitute a contemporaneous
                   record of the activities of City personnel and will allow the City to
                   specifically identify work hours spent on CDBG-eligible activities. An
                   accurate identification of work hours will allow us to calculate and
                   document for HUD the salaries and administrative allocation associated
Comment 2          with those hours. We anticipate that it will take us approximately four (4)
                   months to produce the necessary documentation.

                   We recognize the need for additional training and written procedures to
                   ensure that future submittals documenting salary and administrative
                   allocations meet applicable HUD rules and requirements. We intend to
Comment 2
                   create such written procedures and provide such training to all relevant City
                   staff.

                   Sincerely,

                   Michael Goodson
                   City Manager
                   City of Hawthorne




                                                 13
                         OIG Evaluation of Auditee Comments

Comment 1   The City was not able to provide adequate support for its salary allocations during
            the course of the audit; therefore, the $1.6 million remains unsupported.

Comment 2   The City will have an opportunity to provide additional information to HUD
            during the audit resolution process to resolve the recommendations.




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Appendix C

                                          CRITERIA

2 CFR Part 225 (Office of Management and Budget Circular A-87)
Appendix A to Part 225 - General Principals for Determining Allowable Costs

       C. Basic Guidelines
       3. Allocable costs.
       a. A cost is allocable to a particular cost objective if the goods or services involved are
       chargeable or assignable to such cost objective in accordance with relative benefits
       received.
       c. Any cost allocable to a particular Federal award or cost objective under the principles
       provided for in 2 CFR part 225 may not be charged to other Federal awards to overcome
       fund deficiencies, to avoid restrictions imposed by law or terms of the Federal awards, or
       for other reasons.

Appendix B to 2 CFR 225(8)(d)(1)-(5) Compensation for personal services

d. Fringe benefits.
   (5) The cost of fringe benefits in the form of employer contributions or expenses for social
   security; employee life, health, unemployment, and worker’s compensation insurance (except
   as indicated in section 22, Insurance and indemnification); pension plan costs (see subsection
   e.); and other similar benefits are allowable, provided such benefits are granted under
   established written policies. Such benefits, whether treated as indirect costs or as direct costs,
   shall be allocated to Federal awards and all other activities in a manner consistent with the
   pattern of benefits attributable to the individuals or group(s) of employees whose salaries and
   wages are chargeable to such Federal awards and other activities.

Appendix B to 2 CFR 225(8)(h)(4)and(5) - (Office of Management and Budget Circular A-87)
Compensation for personal services

   h. Support of salaries and wages. These standards regarding time distribution are in addition
   to the standards for payroll documentation.
   (4) Where employees work on multiple activities or cost objectives, a distribution of their
   salaries or wages will be supported by personnel activity reports or equivalent documentation
   which meets the standards in subsection (5) unless a statistical sampling system (see
   subsection (6)) or other substitute system has been approved by the cognizant Federal
   agency. Such documentary support will be required where employees work on:
       (a) More than one Federal award,
       (b) A Federal award and a non-Federal award,
       (c) An indirect cost activity and a direct cost activity,
       (d) Two or more indirect activities which are allocated using different allocation bases, or
       (e) An unallowable activity and a direct or indirect cost activity.



                                                 15
   (5) Personnel activity reports or equivalent documentation must meet the following
   standards:
       (a) They must reflect an after-the-fact distribution of the actual activity of each employee,
       (b) They must account for the total activity, for which each employee is compensated,
       (c) They must be prepared at least monthly and must coincide with one or more pay
       periods, and
       (d) They must be signed by the employee.
       (e) Budget estimates or other distribution percentages determined before the services are
       performed do not qualify as support for charges to Federal awards but may be used for
       interim accounting purposes, provided that:

           (i) The governmental unit’s system for establishing the estimates produces reasonable
           approximations of the activity actually performed;
           (ii) At least quarterly, comparisons of actual costs to budgeted distributions based on
           the monthly activity reports are made. Costs charged to Federal awards to reflect
           adjustments made as a result of the activity actually performed may be recorded
           annually if the quarterly comparisons show the differences between budgeted and
           actual costs are less than ten percent; and
           (iii) The budget estimates or other distribution percentages are revised at least
           quarterly, if necessary, to reflect changed circumstances.

24 CFR 570.200(a)(5) Cost principles.
Costs incurred, whether charged on a direct or an indirect basis, must be in conformance with
OMB Circulars A–87, “Cost Principles for State, Local and Indian Tribal Governments…”

24 CFR 570.206(a)(1)-(4) Program Administrative Costs
(a) General management, oversight and coordination. Reasonable costs of overall program
management, coordination, monitoring, and evaluation. Such costs include, but are not
necessarily limited to, necessary expenditures for the following:

       (1) Salaries, wages, and related costs of the recipient’s staff, the staff of local public
       agencies, or other staff engaged in program administration. In charging costs to this
       category the recipient may either include the entire salary, wages, and related costs
       allocable to the program of each person whose primary responsibilities with regard to the
       program involve program administration assignments, or the pro rata share of the salary,
       wages, and related costs of each person whose job includes any program administration
       assignments. The recipient may use only one of these methods during the program year
       (or the grant period for grants under subpart F). Program administration includes the
       following types of assignments:
               (i) Providing local officials and citizens with information about the program;
               (ii) Preparing program budgets and schedules, and amendments thereto;
               (iii) Developing systems for assuring compliance with program requirements;
               (iv) Developing interagency agreements and agreements with sub-recipients
               and contractors to carry out program activities;
               (v) Monitoring program activities for progress and compliance with program
               requirements;



                                                16
        (vi) Preparing reports and other documents related to the program for submission
        to HUD;
        (vii) Coordinating the resolution of audit and monitoring findings;
        (viii) Evaluating program results against stated objectives; and
        (ix) Managing or supervising persons whose primary responsibilities with regard
        to the program include such assignments as those described in paragraph (a)(1)(i)
        through (viii) of this section.
(2) Travel costs incurred for official business in carrying out the program;
(3) Administrative services performed under third party contracts or agreements,
including such services as general legal services, accounting services, and audit services;
and
(4) Other costs for goods and services required for administration of the program,
including such goods and services as rental or purchase of equipment, insurance, utilities,
office supplies, and rental and maintenance (but not purchase) of office space.




                                        17