This letter provides clarification regarding appropriate practices for charging and allocating costs associated with contractually purchased services. Expenditures for contractually purchased services must not be charged to the cost pools under any circumstances as it relates to the Social Services and Income Maintenance costs pools. Such costs must be charged directly to the benefiting program using the appropriate program and classification code. Appropriate program and classification codes can be accessed by using the complete Central Office Reporting (CORe) mapping tables which are accessible on the ODJFS, Office of Fiscal Services, Bureau of County Finance and Technical Assistance website (jfs.ohio.gov/ofs/bcfta/), with definitions available in the appendix of the Administrative Procedure Manual (APM).

The current cost pool structure used in the county operations finance system includes the income maintenance cost pool, social service cost pool, child support cost pool and the shared cost pool. Definitions and clarification of cost structures associated with these cost pools are found in the Ohio Administrative Code section 5101:9 1 04. Expenditures reported through cost pools represent operating costs of the local agency and include costs of direct casework activity to be measured and allocated to the various federal funding sources and programs administered by the agency through the Random Moment Sample (RMS) time study. All single purpose and multi purpose contracts with service providers must be charged directly to benefiting program funding sources. They may not be included in cost pool expenditures allocated based on time study results.

In instances of multipurpose contracts, the service provider must include an accurate cost distribution for activities and expenditures by benefiting program. For example, if a local agency has contracted with a consultant to provide services for both Workforce Investment Act (WIA) and Temporary Assistance for Needy Families (TANF) program activities, then that consultant must be required by the local agency to submit an invoice specifically identifying how much of the cost was incurred for WIA and TANF activities separately. Expenditures for WIA activities under this contract should be charged using a direct program and class financial code to the appropriate WIA funding source. TANF costs are charged directly to TANF funding. Administrative contracts must be included in the income maintenance cost pool, social service cost pool, child support cost pool, or the shared cost pool, in which costs are assignable to a particular cost objective in accordance with relative benefits received. Cost principles delineating consistent treatment of costs are found in OMB Circular A 87, A 21, and A 122, and are included in the Ohio Administrative Code section 5101:9 1 15. Examples of administrative contracts that would appropriately be charged to a shared cost pools may include building maintenance, human resource services, or any service that indirectly benefits one ore more of the federal programs operated by the local agency.