The definition of administrative costs for WIA-funded programs can be found in the WIA regulations at 20 CFR 667.220.  The definition is function-based; therefore, only the costs associated with performing the activities or functions listed in the regulations and ones that are not related to the direct provision of workforce investment services are considered to be administrative costs.  Some guidance:

• Accounting, financial, cash management, budget activities, procurement, personnel, payroll, property management, audit, and general legal services functions are administrative in nature, as are coordinating the resolution of findings arising from audits, reviews, investigations, and incident reports and developing systems and procedures, including information systems, required for these administrative functions.   
• Oversight and monitoring activities are classified depending on whether the activity being monitored is administrative or programmatic in nature.
• The costs of supplies and equipment used for administrative functions or activities and the cost of staff that perform and/or supervise administrative functions or activities are considered administrative costs.
• This definition of administrative costs is different from facilities and administration costs referred to in OMB Circular A-21.

If the cost of a function or activity in question is not listed as an administrative cost in 20 CFR 667.220, then such cost can be considered a program cost and is not counted against the 5 percent limit.  Please note that the administrative cost limit is applied against the direct grantee; sub-grantees under the CBJTGs will not be required to report administrative costs.

The personnel costs associated with project director and/or program manager positions must be allocated between administrative and programmatic costs based on the activities performed by the individual(s).  The cost of the project director/program manager’s time spent performing activities or supervising functions other than those listed in the WIA definition of administrative costs (e.g., accounting, payroll, procurement, etc.) would be considered program costs even though the individuals performing these activities are part of the organization’s program management.

Rental costs, e.g. the cost of renting space to run a training program or to expand your institution’s available space for a training program, would be an allowable cost, to the extent that such rates are reasonable in light of such factors as: rental costs of comparable property, if any; market conditions in the area; alternatives available; and the type, life expectancy, value, and condition of the type of property leased.  Capital expenditures for improvements to land, buildings, or equipment which materially increase their value or useful life (e.g. putting in an elevator, HVAC or new roof) are unallowable. 

The reasonable and necessary costs of altering or renovating space to make it usable for the project can be an allowable activity with the approval of the Grant Officer. However, if renovation is done to leased facilities, we would recommend that the building owner make the required renovations and that the cost of such activities be recouped through rental costs. Grantees need to ask for approval from the Grant Officer to renovate and/or alter space to meet the requirements of the CBJTGs.