Multifamily Housing Program Financial Management Toolkit

10b. Documenting Personnel Costs

One of the most important aspects of allocating direct costs that benefit more than one grant or program area is the documentation of the cost, regardless of whether it is a personnel or non-personnel cost. Correct allocation of personnel costs, however, often requires more extensive protocols than non-personnel costs. Staff time supporting HUD-funded activities and non-HUD-funded activities must be prorated according to the degree to which the activities benefit the HUD grant.
Some best practice examples follow:

  • Cost reasonableness as it applies to personnel costs is typically established in an organization’s Human Resource records that establish pay ranges and job descriptions.
  • These documents need to demonstrate that the pay scales and benefits for each position are within the range of similar positions in the labor market area and therefore are reasonable.
  • For nonprofit organizations, assistance in establishing and evaluating pay ranges can be obtained from other local nonprofits or from associations of nonprofit organizations that exist in many areas of the country.
  • Personnel costs (i.e., staff salaries and benefits) are reimbursable under a HUD grant when staff time is spent conducting HUD-funded and approved activities and providing services to grant-eligible clients (and only to that portion of total clients served).
    • This requires an effective time recording system that not only supports the personnel costs charged to HUD but also divides the time among the separate program categories required for reporting.
    • Please note that just because staff works exclusively within a HUD-funded program area, 100% of their time may not be reimbursable under an associated HUD grant. This is because staff members typically also spend some time in internal agency meetings, conducting staff reviews and other non-HUD-related activities. The time and costs incurred for these functions are not part of an allowable direct HUD cost, however they may be allowable as a component of the indirect cost basis – depending on what specific activities are being included, e.g. fundraising or lobbying would never qualify for HUD reimbursement.