(a) General--(1) Composition of allowable costs. In general, a cost item will be deemed allowable if it is reasonable and necessary for FMNP purposes and otherwise satisfies allowability criteria set forth in 7 CFR 3016.22 and this part. FMNP purposes include the administration and operation of the FMNP. Program costs supported by State matching contributions must meet the same criteria for allowability as costs supported by Federal funds. Allowable FMNP costs may be classified as follows:
(1) Composition of allowable costs. In general, a cost item will be deemed allowable if it is reasonable and necessary for FMNP purposes and otherwise satisfies allowability criteria set forth in 7 CFR 3016.22 and this part. FMNP purposes include the administration and operation of the FMNP. Program costs supported by State matching contributions must meet the same criteria for allowability as costs supported by Federal funds. Allowable FMNP costs may be classified as follows:
(i) Food costs and administrative costs. Food costs are the costs of food benefits provided to FMNP recipients. Administrative costs are the costs associated with providing FMNP benefits and services to recipients and generally administering the FMNP. Specific examples of allowable administrative costs are listed in paragraph (b) of this section. Except as provided in Sec. 248.14(g) of this part, a State agency's administrative costs under the FMNP may not exceed 17 percent of its total FMNP costs. Any costs incurred for food and/or administration above the Federal grant level will be the State agency's responsibility.
(ii) Market development or technical assistance costs. Market development or technical assistance costs are those costs under Sec. 248.14(h) incurred to promote the development of farmers' markets in socially or economically disadvantaged areas, or remote rural areas, where individuals eligible for participation in the program have limited access to locally grown fruits and vegetables. Subject to a determination by the Secretary under Sec. 248.14(h), a State agency may, during any fiscal year, use not more than 2 percent of total program funds for such market development or technical assistance.
(iii) Direct and indirect costs. Direct costs are food and administrative costs incurred specifically for the FMNP. Indirect costs are administrative costs that benefit multiple programs or activities, and cannot be identified to any one without effort disproportionate to the results achieved. In accordance with the provisions of 7 CFR part 3016, a claim for reimbursement of indirect costs shall be supported by an approved allocation plan for the determination of such costs. An indirect cost rate developed through such an allocation plan may not be applied to a base that includes food costs.
(2) Costs allowable with prior approval. A State or local agency must obtain prior approval in accordance with 7 CFR 3016.22 before charging to the FMNP any capital expenditures and other cost items designated by 7 CFR 3016.22 as requiring such approval.
(3) Unallowable costs. Costs that are not reasonable and necessary for FMNP purposes, or that do not otherwise satisfy the cost principles of 7 CFR 3016.22, are unallowable. Notwithstanding any other provision of part 3016 or this part, the cost of constructing or operating a farmers' market is unallowable. Unallowable costs may never be claimed for Federal reimbursement or counted toward the State matching requirement.
(b) Specified allowable administrative costs. Allowable administrative costs include the following:
(1) The costs associated with the provision of nutrition education which meets the requirements of Sec. 248.9 of this part.
(2) The costs of FMNP coupon issuance, or recipient education covering proper coupon redemption procedures.
(3) The cost of outreach services.
(4) The costs associated with the food delivery process, such as printing FMNP coupons, processing redeemed coupons, and training market managers on the food delivery system.
(5) The cost of monitoring and reviewing Program operations.
(6) The cost of FMNP training.
(7) The cost of required reporting and recordkeeping.
(8) The cost of determining which local WIC sites will be utilized.
(9) The cost of recruiting and authorizing farmers/farmers' markets to participate in the FMNP.
(10) The cost of preparing contracts for farmers/farmers' markets and local WIC providers.
(11) The cost of developing a data processing system for redemption and reconciliation of FMNP coupons.
(12) The cost of designing program training and informational materials.
(13) The cost of coordinating FMNP implementation responsibilities between designated administering agencies. [59 FR 11517, Mar. 11, 1994, as amended at 60 FR 49747, Sept. 27, 1995]