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IV. Program Income Procedures

Grantees must use program income to supplement allowable program costs.  Grantees should expend program income as soon as possible, unless otherwise specified by OCJP.  If program income is not utilized by a grantee, the grantee may have to refund the program income to the Federal government.

  1. PROGRAM INCOME DEFINED

    Program income, as described in 28 CFR, Part 66.25, means gross income received by the subrecipient directly generated by a grant supported activity, or earned only as a result of the grant agreement during the grant period.  “During the grant period” is the time between the effective date of the award and the ending date of the award.
     
  2. EXAMPLES OF PROGRAM INCOME

    Examples of Program Income and Disposition Requirements and the Policies Governing the Disposition of the Various Types of Program Income
    1. Addition Method of Handling Program Income:  In the absence of other restrictions on disposition contained within the grant or the terms and conditions of the project, program income shall be added to the funds committed in the grant.  The program income shall be used as earned by the subrecipient for any purpose that furthers the broad objectives of the legislation under which the grant was made (i.e., expanding the project or program, continuing the project or program that furthers the broad objectives of the State, obtaining equipment or other assets needed for the project or program, or for other activities that further the statute’s objectives).
    2. Sale of Property: In the case of real property purchased in part with Federal funds, the subrecipient may be permitted to retain title upon compensating OCJP for its fair share of the property.  The Federal share of the property shall be computed by applying the Grant specific percentage of the Federal participation in the total cost of the project for which the project was acquired to the current fair market value of the property.
    3. Royalties: Subrecipients shall retain all royalties received from copyrights or other works developed under projects or from patents and inventions, unless the terms and conditions of the project provide otherwise, or a specific agreement governing such royalties has been negotiated between OCJP and the subrecipient.
    4. Attorney’s Fees and Costs: Income received pursuant to a court-ordered award of attorney’s fees or costs, which is received subsequent to completion of the project, is program income to the extent that it represents a reimbursement for attorney’s fees and costs originally paid under the award.  Disposition of such program income is subject to the restrictions on the use of program income set forth in the grant.
    5. Registration/Tuition Fees: These types of program income shall be treated in accordance with disposition instructions set forth in the project’s terms and conditions.
    6. Asset Seizures and Forfeitures: Income received from the sale of seized and forfeited assets (personal or real property) or seized and forfeited money shall follow the “Additional Method” of handling program income.  The following policies apply to program income from asset seizures and forfeitures:
       
      • Program income, with the approval of the OCJP, may be retained by the entity earning the program income or used by OCJP for the purpose that furthers the objectives of the legislation under which the grant was made.
      •     States or local units of government, MAY USE PROGRAM INCOME FUNDS FROM SEIZED AND FORFEITURE ASSETS AS MATCH, when assets are adjudicated by a State Court, in accordance with State law.In addition, State and local units of government MAY use cash received under the equitable sharing program from the non-Federal portion (match) of program costs, as provided for in the guidelines established by the DOJ Asset Forfeiture Office, when the assets are adjudicated by a Federal Court.

    NOTE:  Fines as a result of law enforcement activities are not considered program income.
     

  3. ACCOUNTING FOR PROGRAM INCOME

    All income generated as a direct result of an agency-funded project shall be deemed program income.  Program income must be used for the purposes and under the conditions applicable to the grant.  Unless specified by OCJP, program income should be used as earned and expended as soon as possible.  If the cost is allowable under the Federal grant program, then the cost would be allowable using program income.  Current program income information for State and Local Government and Educational subrecipients should be reported on the online Quarterly Program Income Summary Report. (See OCJP Appendix L). Current program income information should be reported by Non-profit agency subrecipients on the online Policy 03 Tennessee Uniform Subrecipient Reporting For Non-profit Agencies.  The program income amount, if any, is reported on line 39 of Schedule B. (See OCJP Appendix J).   If there is no special condition on the grant concerning the accounting for program income after the funding period, then program income can be used at the discretion of the subrecipient.

    NOTE: State and Local Government and Educational subrecipients who do not  generate program income must submit this report form annually 15 days after the end of the fiscal year or end of the grant period.