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Under federal grant cost principles, a cost is reasonable if it is one a prudent person would incur under the circumstances prevailing at the time. In determining reasonableness, consideration must be given to the following:

• (a) whether the cost is generally recognized as ordinary and necessary;
• (b) sound business practices, undertaken after arm’s-length bargaining, and in compliance with all applicable regulations and award provisions;
• (c) market process for comparable goods or services for the area;
• (d) prudence under the circumstances;
• (e) established practices and policies regarding the incurrence of costs.*

  • See Federal Grant Cost Principles, 2 CFR § 200.404 (2014)

Childcare costs must be necessary to ensure performance under the award. Therefore, childcare expenses may not be charged to a project during periods where there is no performance. There should be clear documentation of both the performance and the benefit periods.

Childcare reimbursements are not appropriate in situations where the service provider was not selected as a result of sound business practices and after arm’s length bargaining. For example, reimbursement is not appropriate if the award recipient has an unmanageable conflict of interest involving their preferred service provider. To ensure sound business practices are followed, childcare expense reimbursement requests must be routed to the Controller’s Office for consideration. They may not be reimbursed using alternative university avenues, such as P-Card payments or Marketplace orders.

���񱦵� has reviewed peer university policies and practices regarding childcare expenses and their reimbursement, in addition to federal sponsor grant allowances. Although such expenses are generally not allowable by our industry peers at this time, CU has determined that up to $3,000/year in childcare expense reimbursements is reasonable and prudent (subject to all other listed requirements, including sponsor allowances).

Allowable childcare costs must be:

• (a) Necessary and reasonable for the performance of the award to take place;
• (b) In conformity with other provisions in the award and cost principles;
• (c) In conformity with university provisions;
• (d) In conformity with other costs incurred;
• (e) Not be included as a cost or used to meet cost sharing or matching requirements by other federally financed program in either the current or a prior period; and
• (f) Be adequately documented.*

  • See Federal Grant Cost Principles, 2 CFR § 200.403 (2014)

For childcare reimbursements to be allowable, the expenses must be necessary for the recipient to perform research or other necessary activities under the award.

The childcare reimbursement is not allowable when it is not in conformity with all other provisions in the award. For example, if the award language defers to university policies and procedures in determining allowability at any point, then such reimbursements would not be eligible for an exception.

Allocable expenses are chargeable or assignable to an award in accordance with the benefit received.*

*See Federal Grant Cost Principles, 2 CFR § 200.405 (2014)

Childcare expense reimbursements may not be charged to the award if the project does not have sufficient funds budgeted to cover the expense, or if the allotted funds for childcare reimbursement have been exhausted. If a sponsored research agreement does not permit faculty members to draw a salary from the award, childcare expenses may not be chargeable to the project, as reimbursement is processed as additional pay. 

The childcare reimbursement request must be allowable under University Policies, including Administrative Policy Statement #4015 (Propriety of Expenses).

The reimbursement request must be evaluated using the Test for Propriety, which asks:

Is the transaction:

1. for official university business?
2. in the best interests of the university?
3. the most effective way to accomplish official university business? Meaning that without the expenses, would programmatic objectives be difficult or otherwise more costly to achieve? Or would the impact, level, or quality of the achievement be reduced?
4. in compliance with applicable policies, laws, regulations, and rules; and contracts, grants, and donor restrictions, including having the required approvals and authorizations by the appropriate fiscal role?
5. within the available resources of the responsibility unit, taking into consideration all outstanding commitments and encumbrances?
6. directly beneficial to the responsibility unit where it is being charged?
7. reasonable? Meaning that the quantity and quality of goods or services being purchased is sufficient to meet the university’s identified need without exceeding it.
8. in compliance with university conflict of interest provisions? Meaning that if an employee derives private gain, or appears to derive private gain, as a result of the transaction, then the transaction violates the conflict-of-interest provisions stated in regent law, regent policy, and in APS 5012-Conflicts of Interest and Commitment in Research and Teaching.

The childcare reimbursement request must also be allowable under University Fiscal Procedures and Procurement Service Center Procedures. A non-exhaustive list of relevant University policies and procedures can be found in the Resources section of this document.

Childcare services must be issued by a qualified provider. To be qualified, a provider must be a licensed childcare provider in the State of Colorado and carry sufficient liability insurance under state law.