(a) What are allowable uses of administrative funds provided to State and local agencies? Administrative funds may be used for costs that are necessary to ensure the efficient and effective administration of the program, in accordance with 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415, which set out the principles for determining whether specific costs are allowable. Some examples of allowable costs in CSFP include:

(b) What are unallowable uses of administrative funds? In addition to those costs determined to be unallowable by the principles contained in the OMB circulars referenced in paragraph (a) of this section, specific examples of unallowable uses of administrative funds in CSFP include:

(c) What costs are allowable only with prior approval of FNS? Capital expenditures, which include the acquisition of facilities or equipment, or enhancements to such capital assets, with a cost per unit of at least $5,000, are allowable only with prior approval of FNS. Examples of equipment include automated information systems, automated data processing equipment, and other computer hardware and software.

(d) What procedures must State and local agencies use in procuring property, equipment, or services with program funds, and disposing of such property or equipment? The procedures that State and local agencies must follow in procuring property, equipment, or services with program funds, or disposing of such property or equipment, are contained in 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415, which set out the principles for determining whether specific costs are allowable. State, local, and Indian tribal governments must comply with 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415, while nonprofit subgrantees must comply with 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415. State and local agencies may use procurement procedures established by State and local regulations as long as these procedures do not conflict with Federal regulations. Federal regulations do not relieve State or local agencies from responsibilities established in contracts relating to procurement of property, equipment, or services. The State agency is the responsible authority regarding the settlement of all contractual and administrative issues arising out of procurements for the program.

(e) What is program income and how must State and local agencies use it? Program income is income directly generated from program activities. It includes, for example, income from the sale of packing containers or pallets, and the salvage of commodities. Program income does not include interest earned from administrative funds. State and local agencies must use program income for allowable program costs, in accordance with 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415.

(f) How must State and local agencies use funds recovered as a result of claims actions? The State agency must use funds recovered as a result of claims actions against subdistributing or local agencies in accordance with the provisions of § 250.17(c) of this chapter. The State agency must use funds recovered as a result of claims actions against participants for allowable program costs. The State agency may authorize local agencies to use such funds for allowable program costs incurred at the local level.