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I. Purpose

Faculty at the University of Colorado – Boulder may receive grants from private or federal sponsors which allow limited funds to be budgeted for childcare-related expense reimbursements.

Historically, the University of Colorado interpreted childcare expenses to be an unallowable expense under Administrative Policy Statement (APS) 4015. APS 4015 requires that all expenses be for university business, and the university has categorized childcare expenses as a personal benefit which is not in furtherance of university business. For example, Under the Procurement Service Center Procedural Statement: Travel, the university specifically excludes “dependent care” from allowable expenses, on the basis that it is a personal benefit.

Under the CU Boulder’s Cost Principles Policy Statement, the Boulder campus holds that, when there is a conflict between external grant and university allowances, “the most restrictive policy or guidance” must be followed. Consequently, childcare expenses are not typically considered an allowable reimbursement by CU Boulder, in alignment with the university’s Procurement Service Center. However, the Boulder Campus Controller’s Office is responsible for final determinations on the allowability of certain expenditures and may issue exceptions to specific policies, procedures, or interpretations promulgated by the Procurement Service Center.

The Campus Controller’s Office has a strong interest in ensuring that any policy exception that impacts expense allowability is fair and transparent. The Childcare Reimbursement Exception Review Procedure is therefore intended to create a standardized process surrounding expense allowability determinations in the case of childcare reimbursement requests by employees who receive eligible sponsored research funding.

II. Procedure

1. Routing Exception Requests

All requests for exception involving the reimbursement of childcare expenses from research grants at the University of Colorado Boulder should be directed to the Exception Coordinator for consideration and determination.

2. Due Diligence

The coordinator will review the following documents before making a determination:

  • Grant documents for the recipient
  • Award budget
  • Actual expenses on the grant for the relevant period
  • Budget of anticipated or past childcare expenses
  • CU policies and procedures

3. Review Requirements

A reimbursement request must meet the following requirements:

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.

CU Boulder 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.

4. Escalations

Requests presenting a novel issue will be escalated to Fiscal Compliance for review.

5. Recordkeeping

An exception determination, and any due diligence undertaken by the Campus Controller’s Office to support that determination, will be maintained for 5 years after the end of the award, or in accordance with specific award provisions, whichever may be longer.

The department is responsible for maintaining all documentation surrounding the appropriateness of the expense, including any receipts or affidavits necessary. The department must also ensure that recordkeeping complies with sponsor terms.

6. Finalizing Requests

Once a reimbursement is approved, the reimbursement will be issued as additional pay.

To process childcare expense reimbursements under an exception, the Department will need submit the request for pay via CU Time using the earnings code “AUT.” This earnings code will be taxable, not incur fringe benefits, and not affect ePERs. The department will also need to ensure that the expenses are reported to the sponsor as childcare reimbursement, and not salary or benefits. For reporting purposes, childcare expense reimbursements will show on under account description of “Position (i.e. FAC FTP) Other Ben.”

The faculty recipient is responsible for consulting with the department or the Campus Controller’s Office to ensure that costs remain appropriate in terms of service provider, cost, and payment terms. Faculty is also responsible for consulting with a personal tax advisor to determine proper reporting for these benefits. The University of Colorado and its employees cannot provide advice on personal tax reporting obligations.

7. Exception Procedure Review & Update

This document will be reviewed, as needed, to account for periodic increases in federal childcare allowances.

III. Resources

Addendum: Novel Issues & Decisions

Issue Request Decision
Should a non-licensed provider be eligible for reimbursement? Faculty member sought reimbursement from NIH of expenses associated with a climbing gym. The climbing gym was not a licensed childcare provider in the state of Colorado. Faculty argued that Colorado does not require licensing for providers that issue instruction in a single sport, such as climbing. The faculty member argued that the use of the climbing gym should therefore be permissible.

No.

A provider must have an active childcare license in the State of Colorado. The childcare provider must have adequately satisfied any requirements deemed appropriate by the State of Colorado in order to maintain their license active and in good standing (including background checks, site visits, etc.).

Unlicensed providers are not eligible for childcare reimbursement by CU Boulder. This includes any situation where provider extends legal (but unlicensed and unregulated) childcare services.
Does a pre-payment for services that will be rendered during a future period of grant performance satisfy the requirement that expenses be “actually incurred” during the time of the grant?

A daycare takes non-refundable annual/biannual payment prior to the school year. The payment is required as a lump sum prior to any service being rendered.

Faculty member sought reimbursement for the non-refundable payment prior to the period of grant performance.

Yes.

A prepayment for future childcare services may be submitted for reimbursement.

The department will be responsible for maintaining all documentation confirming: (1) pre-payment for services is required, (2) pre-payment is non-refundable, and (3) the anticipated or reserved service period coincides with the period of performance for the award.

Policy Profile

  • Exception Requests: Evan Blaisdell
  • Procedure Owner/Contact: Patricia Santiago
  • Procedure Approver: Sheri Valashinas 
  • Effective Date: July 1, 2024 
  • Revision Date: 
  • Review Period: Annual (or as needed)