Chapter 2, Program and Grant Administration Standards for Centers for Independent Living (CILs)

Revision 23-1; Effective Nov. 20, 2023 

2.1 Overview

Revision 23-1; Effective Nov. 20, 2023 

The U.S. Health and Human Services Administration for Community Living (ACL) requires HHSC to develop and implement standards for Centers for Independent Living (CILs). This is to ensure compliance with Title VII of the Rehabilitation Act of 1973, as amended. The Independent Living Base/Operational Grant Standards for Service Providers (ILBOGS) is based on:

  • Section 725 of the Rehabilitation Act of 1973, as amended (the Act);
  • 45 Code of Federal Regulations (CFR) Part 1329; and
  • 45 CFR Part 75.

A CIL that receives funds from HHSC must meet the standards in applicable state and federal regulations, as well as those described in this chapter and in the following sections of Chapter 1, Basic Standards for Centers for Independent Living (CILs), of the ILBOGS:

A CIL must promote and practice an independent living philosophy including commitment to consumer control of the CIL, and:

  • decision-making;
  • service delivery;
  • management;
  • establishment of the policy and direction of the CIL;
  • self-help and self-advocacy — for example, by train people with significant disabilities in self-advocacy;
  • peer relationships and peer role models — for example, have people with significant disabilities who have achieved independent living goals as instructors in its training programs or as peer counselors; and
  • equal access for people with significant disabilities to all public or private services, programs, activities, resources and facilities.

2.1.2 Guiding Principles

Revision 23-1; Effective Nov. 20, 2023 

A CIL is a consumer-controlled, community-based, cross-disability and nonresidential private nonprofit organization. It is designed and operated in the local community by people with disabilities and provides an array of IL services.

A CIL must have written documentation that its board is the CIL's principal governing body and has a majority of members who have significant disabilities.

2.1.3 Access to Community Services

Revision 23-1; Effective Nov. 20, 2023 

Each CIL has written documentation that they promote increased availability and improved quality of community-based programs that serve people with significant disabilities, and removal of any existing barrier that prevents the full integration of these people into society. Existing barriers may include architectural, attitudinal, communication or environmental.

This documentation must demonstrate that the CIL performed at least one activity in each of the following categories:

  • community advocacy;
  • technical help for the community on making services, programs, activities, resources and facilities in society accessible to people with significant disabilities;
  • public information and education;
  • strong outreach to members of populations of people with significant disabilities that are unserved or underserved by programs under Title VII of the Act in the CIL's service area; and
  • collaboration with service providers, other agencies and organizations to help improve the options available for people with significant disabilities to take advantage of the services, programs, activities, resources and facilities in the CIL's service area.

2.1.4 Coordination with State IL Council (SILC)

Revision 23-1; Effective Nov. 20, 2023 

Each CIL must submit to the State Independent Living Council (SILC) a copy of its Annual Performance Report for the State Independent Living Services Program (Administration for Community Living Program Performance Report). See Chapter 4, Reporting. The SILC uses this information for reports including to the Texas Legislature, and to monitor information in the State Plan for Independent Living (SPIL).

2.2 Board of Directors

Revision 19-0; Effective March 1, 2019 

The CIL must be chartered by the state of Texas as a nonprofit organization and must have a board of directors.

2.2.1 Board Responsibilities

Revision 19-0; Effective March 1, 2019 

The board must:

  • ensure that the CIL maintains the organization's focus on its mission and purpose;
  • hire the executive director;
  • outline the responsibilities of each position and each member in the board's organization;
  • either as a whole or by means of the CIL's finance committee, regularly review actual revenue and expenditures and compare them with budgeted revenue and estimated costs;
  • meet at least quarterly;
  • review and approve programs and budgets;
  • periodically review policies and procedures for the organization's operation; and
  • review and approve changes and revisions to policies and procedures before implementation.

2.2.2 Board Orientation and Training

Revision 19-0; Effective March 1, 2019 

Each board member must receive training that covers board responsibilities and applicable CIL policies, to be provided within 90 days of his or her board appointment.

2.2.3 Board Minutes

Revision 19-0; Effective March 1, 2019 

Board meeting minutes must include, at a minimum, the following:

  • meeting date and location;
  • names of all attendees and visitors;
  • agenda;
  • progress made on grant work plan goals and objectives;
  • all items voted upon;
  • results of votes; and
  • date the board approved the minutes.

2.2.4 Insurance or Bonding

Revision 19-0; Effective March 1, 2019 

The CIL must observe sound business practices in securing bonding and insurance to provide adequate coverage for HHSC-funded projects.

Board members and staff members must be insured or bonded when required:

  • by the organization's bylaws;
  • by law or regulations;
  • as a condition of the grant award; and
  • to protect HHSC's grant interests.

2.3 CIL Organization

Revision 23-1; Effective Nov. 20, 2023 

2.3.1 Organizational Policies

Revision 23-1; Effective Nov. 20, 2023 

A CIL must develop and follow policies and procedures that comply with:

  • 45 CFR;
  • The Rehabilitation Act of 1973, as amended; and
  • Independent Living Base/Operation Grant Standards for Service Providers.

The CIL board must ensure that organizational policies and procedures include:

  • personnel policies which CIL management and staff members follow;
  • financial management and procurement standards; and
  • program service guidelines that comply with federal and state requirements.

Organizational policies and procedures must be:

  • written;
  • periodically reviewed by the board; and
  • published and distributed or made available to all board and staff members.

Any changes or revisions must have board approval before becoming effective.

2.3.2 Organizational Budget

Revision 23-1; Effective Nov. 20, 2023 

The CIL organizational budget:

  • reflects monetarily, the organizational goals and objectives for the coming year;
  • provides an opportunity to review the prior year's actual expenditures against the initial budget; and
  • allows assessment of differences to determine if they are likely to recur in the coming year and should be reflected in the new budget.

The CIL must maintain an organizational budget that:

  • is prepared at least annually;
  • is approved by the board;
  • identifies all anticipated funding sources; and
  • identifies planned use of all financial resources.

2.4 CIL Grant Information

Revision 23-1; Effective Nov. 20, 2023 

2.4.1 CIL Responsibilities

Revision 23-1; Effective Nov. 20, 2023 

The CIL must:

  • accept full legal responsibility for the program, including fulfilling grant requirements;
  • direct all program and administrative aspects through effective and sound management practices and policies; and
  • provide fiscal and program management of the grant.

2.4.2 Grant Work Plan

Revision 23-1; Effective Nov. 20, 2023 

The CIL prepares a grant work plan with goals, objectives, activities, and measurable outputs and outcomes and has the responsibility to fulfill the plan. The plan must be consistent with the State Plan for Independent Living (SPIL) at the time the grant application is prepared. If a new SPIL becomes effective after the grant application is prepared and requires changes to the work plan, the CIL must consult the Grant Award and Contract section to see if a contract amendment is required. See 2.4.4, Grant Award and Contract. Addition of new counties to a CIL’s service area or changes to the scope of work would also require a new work plan.

2.4.3 Grant Budget

Revision 23-1; Effective Nov. 20, 2023 

A budget must be prepared for each year of the grant period. The grant budget reflects anticipated costs related to the goals, objectives, activities and outcomes outlined in the grant work plan. Costs are budgeted under seven cost categories, described later in this section.

2.4.4 Grant Award and Contract

Revision 23-1; Effective Nov. 20, 2023 

After approving the application, HHSC develops a bilateral contract. The basis of the agreement between HHSC and the CIL include:

  • the approved application;
  • the contract; and
  • any amendments and updates to the application and the contract.

Any commitment or expenditure of grant funds must be based on the approved application and signed contract, as well as on amendments and updates to the contract and application.

An amendment to the contract is required when a substantial change to the contract or work plan is made.

Changes to goals or objectives in the work plan require an amendment. Major changes to activities such as deleting an activity, adding a new activity or substantially altering an activity, may require an amendment. The CIL should consult with the contract manager when making such changes.

CILs are reimbursed for allowable budgeted expenses incurred and paid while providing services consistent with the terms of the contract.

2.4.5 Special Grant Conditions

Revision 23-1; Effective Nov. 20, 2023 

A CIL may be considered higher risk if HHSC determines that the CIL:

  • demonstrates poor performance in the conduct of grant requirements;
  • is not financially stable; or
  • does not comply with:
    • Independent Living Base/Operational Grant Standards for Service Providers; 
    • provisions of the grant application;
    • the contract; or
    • applicable state and federal rules, regulations or laws.

Based on these factors that indicate higher risk, the HHSC grant may include special conditions or restrictions, such as:

  • more approvals of grant decisions;
  • required training or technical help;
  • payment on a reimbursement basis instead of cash advances;
  • more frequent financial or program performance reports; and
  • increased grant or project monitoring.
     

2.5 Financial Management

Revision 23-1; Effective Nov. 20, 2023 

All CILs must comply with applicable Office of Management and Budget (OMB) and Generally  Accepted Accounting Principles (GAAP) fiscal and accounting requirements. CILs must adopt those fiscal control and fund accounting procedures, as necessary, to ensure proper disbursement of, and accounting for, CIL funds.

The CIL maintains a sound fiscal management system that:

  • discloses financial results;
  • maintains accurate and complete records of funding sources and uses of all grant funds;
  • complies with grant rules and regulations;
  • maintains system-generated reports required by the board, executive director and funding agencies;
  • evaluates progress toward objectives; and
  • has an internal control structure that separates funds, authorizes expenditures, addresses separation of duties, includes adequate checks and balances, records financial transactions and limits access to assets.

The CIL's policies and procedures for financial management should include methods for making payments, accounting for program income, approving budget revisions, determining legitimacy of costs and establishing fund availability.

The CIL must follow all state laws regarding prompt payment to its vendors.

2.5.1 Accounting System

Revision 23-1; Effective Nov. 20, 2023 

2.5.1.1 Financial Information

Revision 23-1; Effective Nov. 20, 2023 

The CIL must maintain an accounting system and records that:

  • record revenue and expenditures using generally accepted accounting principles;
  • include a chart of accounts that lists all accounts by an assigned number;
  • contain a general ledger and subsidiary ledgers;
  • identify all funding sources and expenditures by separate fund type; and
  • use a double-entry accounting system such as the cash, the accrual or the modified accrual system.

2.5.1.2 Fund Accounting

Revision 23-1; Effective Nov. 20, 2023 

Fund accounting is a system where separate records are maintained for each funding source. When fund accounting is used, the chart of accounts must be carefully structured and must account for each program separately. For example, HHSC reimburses the CIL for specific line-item costs.

The CIL must define circumstances where the chart of accounts may be revised and the frequency of board approval.

2.5.2 Financial Administration Authority

Revision 23-1; Effective Nov. 20, 2023 

CILs must designate people who have financial administration authority to:

  • enter into contracts;
  • request and expend funds;
  • seek and pursue funding sources; and
  • administer and manage all fiscal matters on behalf of the CIL.

CIL policy approved by the board must indicate positions and areas of responsibility for financial administration. Positions with financial administration authority may include:

  • the CIL board chair, president or a board member with relevant expertise;
  • the CIL executive director or chief executive officer; and
  • other staff members or contractors with financial responsibilities.

Those given financial administration authority must have sufficient experience in grant expenditures, including:

  • keeping financial records;
  • preparing financial statements;
  • budgeting;
  • anticipating financial needs;
  • safeguarding and managing financial assets;
  • complying with federal and state reporting requirements;
  • establishing and monitoring a system of internal controls;
  • participating in long-range planning to secure permanent funding for projects that provide services; and
  • signing financial documents to certify their accuracy and validity per HHSC reporting requirements and CIL policy approved by the board.

2.5.3 Funds Management

Revision 23-1; Effective Nov. 20, 2023 

2.5.3.1 Request for Payment

Revision 23-1; Effective Nov. 20, 2023 

CIL contracts are classified as cost reimbursement contracts, which means that CILs are reimbursed for allowable incurred costs. The CIL may request operating funds for up to 30 days in advance or to be reimbursed for allowable costs already incurred.

CILs that meet the contract requirements may request advance payments, certifying that the amount requested will not exceed 30 days' operating funds. If advanced funds are not expended during the month of the request, they must be adjusted on the next request.

CILS must complete form 3470, Request for Advance or Reimbursement (RAR), at least every 90 days for the base grant contracts. If the CIL does not meet the requirements of the contract, HHSC may:

If the CIL does not meet the requirements of the contract, HHSC may:

  • adjust payments;
  • reimburse based on actual costs already incurred;
  • require more supporting documentation to make payments; and
  • take other action, as appropriate.

2.5.3.2 Recoupment of Funds Paid

Revision 23-1; Effective Nov. 20, 2023 

A contractor must respond promptly in settling claims when HHSC discovers an overpayment. If a contractor discovers an overpayment from HHSC, the contractor should self-report the overpayment to the contract manager immediately and arrange for reimbursement.

2.5.3.3 Payments Due

Revision 23-1; Effective Nov. 20, 2023 

HHSC must pay only for goods and services that meet the requirements in the Independent Living Base/Operational Grant Standards for Service Providers and on the service authorization.

2.5.3.4 Interest Income

Revision 23-1; Effective Nov. 20, 2023 

The CIL must ensure that no more than $500 earned in interest on advance payments is retained for administrative expenses over the grant year.

2.5.3.5 Cash Management

Revision 23-1; Effective Nov. 20, 2023 

CIL cash management policies must address:

  • check and cash receipting;
  • petty cash funds if used; and
  • check processing.

Cash receipts and checks must be deposited promptly and recorded in the accounting system per CIL policies. Also:

  • a cash-receipts log must be maintained; and
  • checks must be restrictively endorsed.

Petty cash disbursements must be:

  • approved;
  • adequately safeguarded; and
  • properly recorded.

Checks for CIL purchases must be processed by completing an order or request. CIL policy must identify those with authority to approve expenditures and sign checks.

The CIL must maintain proper custody over checks, including voided checks.

2.5.3.6 Bank Reconciliation

Revision 23-1; Effective Nov. 20, 2023 

Bank accounts must be reconciled monthly by someone who does not disburse, receive or record receipt of funds.

Records must include:

  • initialed and dated monthly reconciliation;
  • bank statement;
  • check register;
  • canceled and voided checks;
  • electronic funds transactions; and
  • any other applicable accounting records.

All adjusting entries must be approved by management and promptly recorded by appropriate staff members. Expenditures recorded on the general ledger must be compared to the bank or credit card statements. If any expenditures are not included on the statements due to vendor delays in depositing payment or payment not being submitted by the CIL, the reconciliation must document efforts to resolve the discrepancy.  

2.5.3.7 Disbursements

Revision 23-1; Effective Nov. 20, 2023 

Verify and enter all cash disbursements into the CIL's accounting system.

2.5.4 Other Sources of Funds

Revision 23-1; Effective Nov. 20, 2023 

In the grant application, the CIL provides information about other sources of funds used to support the CIL program, in addition to HHSC grant funds. These other sources of funds may include:

  • RSA federal funds and other grant money;
  • donated volunteer services and goods; and
  • program income.

The CIL must determine the value of donated goods and volunteer services and show them as other sources of funds in the grant application. The value of donated goods must reflect the cost that would be incurred if the CIL purchased the items and was not reimbursed as either a direct or indirect cost. Donated goods and volunteer services must be allowable, reasonable, and necessary to the program to be reported. See 2.6.7, Volunteer Program for guidance on how to value volunteer time.

See 45 CFR Part 75 for more information about funding. 

Program Income

Program income is gross income earned by the CIL that is directly generated by a supported activity of the CIL grant award.

The CIL must ensure that program income is:

  • used during the current fiscal year as a deduction from total allowable costs charged to the grant; or
  • an addition to the grant funds to be used for other allowable program expenditures; and
  • accounted for separately for each fiscal year.

The CIL must maintain policies that:

  • document resources used in generating program income;
  • ensure that earned and used program income is accounted for separately in the chart of accounts; and
  • address the process to carry forward program income.

Records must include:

  • sources of program income;
  • amount of program income received; and
  • quarterly financial reports consistent with accounting records.

2.5.5 Cost Principles and Approval

Revision 23-1; Effective Nov. 20, 2023 

2.5.5.1 Authorization

Revision 23-1; Effective Nov. 20, 2023 

All costs must be reasonable, necessary, allowable and allocable to the contract per 45 CFR Part 75.  Costs allowable under 45 CFR Part 75 are determined to be allowable unless stated otherwise in the ILBOGS or the contract.

If the CIL has questions about a specific cost that is not addressed in 45 CFR Part 75, the CIL should seek technical assistance from the contract manager.

2.5.5.2 Cost Allocation Plan

Revision 23-1; Effective Nov. 20, 2023 

When costs are distributed between multiple programs or cost centers, a CIL must submit a cost allocation plan with the grant application to ensure that all costs are allocated properly. The CIL must pay particular attention to personnel, building costs and equipment. See 45 CFR 75.417 and appendices IV, V and VI for details about cost allocation plans. 

The CIL must:

  • get board approval of the cost allocation plan;
  • update the cost allocation plan as needed — for example, when new funding sources are obtained;
  • document application of the cost allocation plan to shared costs to ensure that the correct share is requested from the HHSC grant; and
  • submit the cost allocation plan to the contract manager when the grant application is submitted and when revisions are made.

2.6 Personnel

Revision 23-1; Effective Nov. 20, 2023 

2.6.1 Staff Members with Disabilities

Revision 23-1; Effective Nov. 20, 2023 

The CIL's organizational and personnel assignment practices, as documented in written board policy, must comply with Section 503 of the Rehabilitation Act, including taking affirmative action to employ and promote qualified people with significant disabilities.

A CIL must also document that the most of its staff members, including members in decision-making positions, are people with disabilities.

2.6.2 Staff Qualifications

Revision 23-1; Effective Nov. 20, 2023 

CIL staff members must include specialists in developing and providing IL services and developing and supporting a CIL. To the greatest extent possible, personnel should be available who can communicate:

  • with people with significant disabilities who rely on alternative modes of communication, such as manual communication, nonverbal communication devices, braille or audiotapes;
  • with people who apply for or receive IL services under Title VII of the Act; and
  • in the native languages of people with significant disabilities whose English proficiency is limited and who apply for or receive IL services under Title VII of the Act.

2.6.3 Required Staff Documentation

Revision 23-1; Effective Nov. 20, 2023 

Each provider must have the following documents on file for all personnel who provide services directly to HHSC consumers, including the director:

  • Form 3455, Provider Staff Information;
  • supporting evidence of qualifications and experience, such as:
    • professional credentials;
    • copies of college transcripts;
    • certificates of specialized training;
    • statements from former employers or other documentation;
  • completed I-9, U.S. Department of Justice Employment Eligibility Verification Form, as applicable and see the U.S. Citizenship and Immigration services website for more information; and
  • signed IRS W-4 form.

2.6.4 Staff Information Form 3455

Revision 23-1; Effective Nov. 20, 2023 

Form 3455 must be updated and submitted to HHSC within 30 days after any of the following:

  • hiring staff;
  • a significant change in a staff member's job duties or time spent on the grant;
  • a change in staff qualifications; or
  • termination of a staff member.

The service provider is responsible for ensuring all staff maintain qualifications and sign this form verifying the staff member's qualifications, as documented in the Independent Living Base/Operational Grant Standards for Service Providers. Staff qualifications are listed within the chapter where the service is defined.

Form 3455 must be submitted both to the HHSC contract manager and the contract manager who manages the provider's contract.
 

2.6.5 Temporary Waiver of Director and Staff Services Credentials

Revision 23-1; Effective Nov. 20, 2023 

When a service provider loses a credentialed staff member, a temporary exception to use a non-credentialed staff member to act as director or to provide contracted services may be approved. The waiver is specific to the provider and staff member named in the Temporary Waiver of Credentials. The Temporary Waiver of Credentials is submitted by sending an email to the provider mailbox with the following information:

  • position that the temporary waiver is being requested to fill;
  • name of the person to temporarily fill the position;
  • resume and verification of any credentials of the person who will temporarily fill the position; and
  • anticipated length of time the waiver will be required.

The Temporary Waiver of Credentials is allowed only when:

  • a provider's director leaves the entity;
  • there are no other qualified credentialed staff available to provide the service;
  • it is necessary to avoid a break in essential services being provided by the service provider to an HHSC consumer; and
  • the waiver is in the best interest of the consumer.

HHSC will only approve the Temporary Waiver of Credentials for individuals who fail to maintain their credentials on rare occasions. The Temporary Waiver of Credentials was developed to assist with the time needed to gain credentials for new staff.

A copy of the approved email requesting the Temporary Waiver of Credentials must be kept in the contractor’s file by the HHSC contract manager and by the service provider.

The Temporary Waiver of Credentials must be approved before the non-credentialed staff person provides any direct services to HHSC consumers.

2.6.6 Staff Training and Development

Revision 23-1; Effective Nov. 20, 2023 

CILs must establish and maintain a program of staff development for those involved in providing IL services and, if appropriate, in administering the CIL program. Staff development programs should emphasize improving the skills of staff members directly responsible for providing IL services, including knowledge and practice of the IL philosophy. A CIL must provide training to its staff on how to serve unserved and underserved populations, including minority groups and urban and rural populations, as evidenced by in-service training records.

2.6.7 Human Resources Policies and Procedures

Revision 23-1; Effective Nov. 20, 2023 

CILs must comply with federal and state employment laws in their human resources policies.

CIL policies must address:

  • Fair Labor Standards Act (FLSA) minimum wage and maximum hours provisions;
  • definitions of full-time, part-time and temporary positions;
  • wage and salary schedule;
  • approved job descriptions, including duties and functions of each position;
  • minimum knowledge, skills and abilities to perform the job;
  • hiring;
  • employee performance appraisal;
  • employee separation or termination; and
  • professional conduct.

The CIL must maintain an organization chart outlining the current structure of the CIL organization. The chart must:

  • identify all staff and volunteer positions by job title, including supervisory positions; and
  • define reporting relationships among positions, which must be approved by the board.

The CIL must maintain personnel files that include, at a minimum:

  • current application or résumé;
  • current job description;
  • documents that support payroll deductions including a W4 and court orders;
  • proof of citizenship or right to work in the United States 
    • Form I-9; or 
    • other state or federally recognized form;
  • proof of professional credentials, if applicable; and
  • current driver license and evidence of automobile insurance if applicable.

Annual performance evaluations may be either kept in the personnel file or in a separate secure location. The performance evaluations must be made available at the request of HHSC.

2.6.8 Time and Effort Reporting

Revision 23-1; Effective Nov. 20, 2023 

Base time reporting on documented payrolls approved by responsible officials of the organization. Salaries and wages must be supported by personnel activity reports reflecting the distribution of activity of each employee charged to the grant. The reports must:

  • reflect an after-the-fact determination of the actual activity of each employee;
  • account for the total activity that employees are compensated which is required in fulfillment of their obligations to the organization;
  • be signed by each employee and by a responsible supervisory official having first-hand knowledge of the activities performed by the employee, assuring the distribution of activity represents a reasonable estimate of the work the employee performed during the periods covered by the reports; and
  • be prepared at least monthly and coincide with one or more pay periods.

Policy must address:

  • work hours;
  • attendance; and
  • leave reporting.

2.6.9 Fringe Benefits

Revision 23-1; Effective Nov. 20, 2023 

The following are considered benefits if the costs are absorbed by all organizational activities in proportion to the amount of time or effort devoted to each:

  • regular compensation paid to employees for authorized absences, such as vacation leave and sick leave; and
  • employer contributions to Social Security, workers' compensation, insurance and pension plans.

Policy must address:

  • accrual, balance and carryover of leave;
  • holidays;
  • insurance;
  • retirement;
  • deferred compensation;
  • workers' compensation; and
  • unemployment compensation.

2.6.10 Volunteer Program

Revision 23-1; Effective Nov. 20, 2023 

When a CIL uses a volunteer to fill a position that fulfills a critical function of the IL program, the CIL must provide:

  • an approved job description;
  • time sheets signed by the volunteer and supervisor; and
  • documented valuation of the hourly rate assigned to the volunteer's time.

These requirements do not apply to one-time, spontaneous or informal volunteer activities.

The value of volunteer services in positions that would otherwise require hired staff members is based on the work performed. CILs that already have employees performing these activities may use their own rate of pay to assess the value of volunteer services. If a CIL does not have employees in a similar position, it may use standard local compensation for such positions. 

2.7 Procurement

Revision 23-1; Effective Nov. 20, 2023 

CIL procurement policies must address:

  • conflict of interest situations;
  • planning for procurement needs;
  • criteria and situations for getting bids or proposals;
  • purchasing of supplies and equipment;
  • contracts for goods or services; and
  • maintenance of procurement records.

2.7.1 Procurement Procedures

Revision 23-1; Effective Nov. 20, 2023 

CILS must have written procurement procedures that address the requirements of 45 CFR 75.327-335, including:

  • avoiding the purchase of unnecessary items;
  • where appropriate, analyzing lease and purchase alternatives to determine which would be the more economical and practical procurement for the CIL;
  • ensuring that solicitations for goods and services provide for all the following:
    • a clear and accurate description of the technical requirements for the material, product or service to be procured. In competitive procurements, the description must not contain features that unduly restrict competition;
    • requirements that the bidder must fulfill and all other factors used in evaluating bids or proposals;
    • a description, whenever practicable, of technical requirements in terms of functions to be performed or performance required, including the range of acceptable characteristics or minimum acceptable standards;
    • the specific features of "brand name or equal" descriptions that bidders are required to meet when such items are included in the solicitation;
    • the acceptance, to the extent practicable and economically feasible, of products and services dimensioned in the metric system of measurement;
    • preference, to the extent practicable and economically feasible, for products and services that conserve natural resources, protect the environment and are energy efficient;
  • making efforts to use small businesses, minority-owned firms and women's business enterprises, whenever possible;
  • clarifying the type of procuring instruments used, for example, fixed price contracts, cost reimbursable contracts, service authorization or purchase orders, and incentive contracts); 
  • ensuring that contracts are made only with responsible contractors who have the potential ability to perform successfully under the terms and conditions of the proposed procurement; and
  • monitoring the performance of all contracted vendors in writing at least annually.

CILs must, on request, make available to HHSC pre-award review and procurement documents, such as requests for proposals or invitations for bids, independent cost estimates, etc.

2.7.2 Asset and Inventory Management Policies

Revision 23-1; Effective Nov. 20, 2023 

CILs must develop and follow policies and procedures that address asset purchase and inventory records, safeguarding assets, periodic conduct of inventory and disposition of HHSC-funded assets.

2.7.3 Disposition of Depreciable Assets

Revision 23-1; Effective Nov. 20, 2023 

CILs must:

  • dispose of equipment by following the current edition of the American Hospital Association's (AHA’s) Estimated Useful Lives of Depreciable Assets, except when federal or statutory requirements supersede; and
  • request approval from the HHSC program staff before disposing of equipment with a fair market value of $5,000 or more, or a controlled asset before the end of that item's useful life, or as otherwise required by contract.

Get the AHA Estimated Useful Lives of Depreciable Assets through:

The requirements in the Uniform Grant Management Standards must be followed if an item of equipment or a controlled asset is not:

  • contained in the AHA Estimated Useful Lives of Depreciable Assets;
  • governed by contract; or
  • superseded by federal or state requirements.

If approval for disposition is not required, or approval has already been obtained from HHSC program staff members, sub-recipients must ensure that disposition of any equipment or controlled asset is per the terms of the contract, such as compliance with Generally Accepted Accounting Principles and any applicable federal guidance.

2.8 Budget Categories

Revision 23-1; Effective Nov. 20, 2023 

2.8.1 Salary and Wages

Revision 23-1; Effective Nov. 20, 2023 

Employee compensation costs or compensation for personal services must be calculated in compliance with 45 CFR Part 75, and meet HHSC requirements.

A CIL must:

  • compensate employees:
    • as per policies, programs and procedures that effectively relate individual compensation to the person's contribution to the performance of the contract work;
    • follow policies that result in internally consistent, equitable treatment of employees; and
    • pay employees a wage or salary that is comparable to that paid for similar services outside the organization in the labor market in which the CIL competes for the kind of employees involved;
  • review and approve salaries by position or function; and
  • ensure that employees who work:
    • solely on a single award or cost objective are supported by periodic certifications that employees worked solely on the IL program; or
    • on multiple activities or cost objectives and record the actual time spent on each funded activity on a timesheet or personnel activity report. Time sheets or personnel activity reports must reflect an after-the-fact distribution of actual activity.

A CIL must not bill and receive reimbursement from funding sources for more than 100 percent of an employee's total salary or work time.

Individual salaries may be increased permanently for merit, to account for cost-of-living, or when an employee is promoted. One time salary increases may only be provided for merit rather than as a distribution of unspent funds. HHSC may request unredacted performance evaluations to support a one-time merit increase.

2.8.2 Fringe Benefits

Revision 23-1; Effective Nov. 20, 2023 

Fringe benefits are allowances and services that the CIL provides to employees as additional compensation. Employer contributions for employees' health insurance, life insurance and retirement plans are examples of fringe benefits. Also included are items required by law for the benefit of employees, the employer's portion of the Federal Insurance Contributions Act tax (FICA, also known as Social Security), workers' compensation insurance and unemployment insurance.

A CIL must determine its responsibilities and comply with applicable state and federal laws and regulations, including the following:

  • workers' compensation — questions may be addressed to a qualified local insurance agency, the State Board of Insurance or the State Industrial Accident Board;
  • FICA — questions may be addressed to the IRS;
  • federal unemployment taxes — questions may be addressed to the IRS;
  • state unemployment taxes — questions may be addressed to the Texas Workforce Commission.

The percentage of costs for an employee's fringe benefits charged to the contract must not exceed the percentage of time or effort the employee devotes to the contract.

2.8.3 Travel

Revision 23-1; Effective Nov. 20, 2023 

Travel-related expenses are budgeted and allowed on a cost-incurred basis if the costs are reasonable, necessary, allocable and substantiated by adequate documentation. Travel costs are limited to the rates and line items approved in the contract.

Travel expenses are allowable if they are incurred by the CIL's employees while performing official contract business. Travel expenses for consumers are included in the Other Costs category.

Travel-related expenses include:

  • meals;
  • lodging;
  • personal vehicle mileage;
  • airfare;
  • parking fees;
  • toll fees;
  • taxi fare; and
  • other travel-related costs.

Reimbursement for meals and lodging is allowed only for approved, overnight travel outside the designated headquarters (city limits). HHSC reimbursement for meals, lodging and mileage may not exceed the comptroller's established Travel Reimbursement Rates. If the CIL has a policy that sets travel reimbursement rates lower than the current state rates, budgeting and contract reimbursement cannot exceed the rate set by the CIL's policy.

If the CIL has a policy that sets travel reimbursement rates higher than the current state rates, the difference between the state's allowable contract reimbursement and the CIL rates may be made up from other funding sources.

Per 45 CFR 75.474, airfare costs more than the customary standard commercial airfare of coach or its equivalent, or of the lowest commercial discount airfare, are unallowable except in special circumstances, which must be documented.

All out-of-state travel requires prior written approval from HHSC, whether through the budget workbook or a separate budget request. The purpose and destination must be stated, and if available, supporting documentation must be maintained to justify the expense, including meeting or conference agendas.

Budgeting and reimbursement requests for out-of-state travel must not exceed out-of-state per diem rates in the Comptroller's established travel reimbursement rates. Allowability of out-of-state travel costs is determined based on comparing total costs for similar or comparable travel purposes available within the state.

Travel policy for local, in-state and out-of-state travel must address:

  • allowable travel;
  • required documentation;
  • reimbursement rates; and
  • circumstances where an advance may be issued and procedures for reconciliation of actual costs.

Records must include:

  • a travel report signed by the traveler that includes:
    • certification that the employee incurred travel expenses while performing official contract business;
    • the purpose of the trip;
    • points of departure and arrival; and
    • dates and times of departure and arrival;
  • receipts, invoices, travel and mileage logs, travel vouchers and any other documentation that supports the CIL's travel-related costs (receipts for meals are required if the CIL's policy includes this requirement);
  • a canceled check or other documentation that indicates:
    • the amount reimbursed for travel; and
    • reconciliation of actual costs if an advance was issued; and
  • accounting system entries that detail the amount of travel paid

Employees may not be reimbursed more than the actual allowable expenses incurred during travel. Any amounts exceeding the actual expenses must be returned to the CIL or covered by another funding source.

2.8.4 Equipment

Revision 23-1; Effective Nov. 20, 2023 

Equipment includes articles of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost that:

  • is $5,000 or more; or
  • exceeds the capitalization level established by the organization for financial statement purposes, if lower.

The CIL must get prior HHSC approval to buy equipment. Equipment bought through the contract is owned by the CIL but is subject to an equitable claim by the state when closing or terminating the contract. The CIL is accountable for equipment purchased through the contract. The CIL must bill equipment per federal regulations found in 45 CFR Part 75.

The CIL must:

  • define equipment as stated in the applicable law, regulation or condition of the grant award;
  • require that all purchases covered by the above definition be capitalized; 
  • maintain a capitalization and depreciation schedule; and
  • specify requirements for insurance coverage.

A CIL may include equipment rental or lease in the grant budget if:

  • the cost is reasonable; and
  • the cost of leasing over the life of the contract is less than the purchase price.

Note: The authorized rental or lease of items classified as anything other than equipment should be included in the "Other Costs" line item of the contract budget.

2.8.5 Supplies

Revision 23-1; Effective Nov. 20, 2023 

A consumable material or supply is any article that is not classified as equipment or intangible personal property and has a useful life of less than one year. Consumable materials and supplies charged by a CIL as a direct cost must include only the materials and supplies used to carry out the contract.

Material and supply items usually fall into one of the following categories:

  • office supplies — such as pens, paper, notebooks, staplers and binders;
  • program supplies — such as training materials and outreach materials; and
  • maintenance supplies — such as soap, paper towels, mops and cleaning products.

The CIL must:

  • ensure that supplies are approved by authorized staff members;
  • ensure that supplies are purchased competitively per the 45 CFR Part 75;
  • ensure that purchased supplies will be used during the current budget period to avoid stockpiling supplies; and
  • get approval from HHSC before disposing of supplies whose average fair market value exceeds $5,000.

Controlled Assets

Controlled assets are items of real or personal property with an estimated life of greater than one year, but an acquisition cost of less than $5,000. These items are considered high risk and have a high potential for loss. Therefore, controlled assets must be maintained in a contractor's inventory system and tagged based on specified acquisition costs.

CILs should review the Comptroller's State Property Accounting (SPA) User Manual for the most current listing of controlled assets. CILs must add items classified as controlled assets to their inventory list based on the acquisition costs in the SPA Manual.

2.8.6 Contractual

Revision 23-1; Effective Nov. 20, 2023 

This budget category may include consumer services that are either subcontracted or else are janitorial, or accounting and maintenance services, that are addressed by a contract. CIL contracting policy must be followed to determine which services should be contracted.

2.8.7 Other Costs

Revision 23-1; Effective Nov. 20, 2023 

Other costs are those that are not covered by the preceding cost categories. These typically include items such as building rent, utilities, postage and insurance. In addition, any travel costs such as bus passes, mileage or reimbursement paid to or on behalf of consumers are included in this cost category. Each cost must conform to federal and state regulations.

2.9 Records Management

Revision 23-1; Effective Nov. 20, 2023 

CILs must establish records management policies and procedures that ensure compliance with the HHSC contract and 45 CFR Part 75. CIL records must fully disclose and document:

  • the amount and disposition by the CIL of grant funds;
  • cost of the project where grant funding is given or used;
  • the amount of project cost funding supplied by other sources; and
  • compliance with the requirements of Chapter 1 of Title VII of the Act and Title 45 of the Code of Federal Regulations.

2.9.1 Recordkeeping

Revision 23-1; Effective Nov. 20, 2023 

The CIL record-keeping system must contain data concerning the grant program's funds, including information necessary to receive payment.

The CIL must ensure that funds are being spent and used per the grant award.

2.9.2 Required Documentation

Revision 23-1; Effective Nov. 20, 2023 

Records must include, but are not limited to:

  • up-to-date ledgers and journals;
  • logs of management-approved adjusting journal entries;
  • supporting documentation for all journal entries;
  • bank and credit card statements;
  • canceled checks;
  • deposit slips;
  • records of electronic transactions;
  • approved invoices;
  • receipts;
  • leases;
  • contracts;
  • time sheets;
  • inventory;
  • capitalization and depreciation schedule; and
  • cost allocation sheets.

CILs must maintain the security and confidentiality of grant records including the adoption and implementation of policies and procedures that meet the requirements of the HHSC Data Use Agreement to safeguard the confidentiality of all personal information, including photographs and names.

2.9.3 Review of Records

Revision 23-1; Effective Nov. 20, 2023 

The CIL must:

  • maintain correct administrative, program or consumer, and fiscal records reflecting the grant's performance; 
  • use a staff member not involved in the direct delivery of services to conduct written reviews at least 10 percent of active cases annually; and
  • provide HHSC or others authorized by law or regulations to conduct reviews or audits access to its grant-related records for programmatic or fiscal purposes during the grant budget and retention period.