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References. 4 CFR 1-15.7. Background. In the past, OIG auditors have questioned the interest costs associated with lease purchase and other capital lease arrangements. In response to certain inquiries, OIG reviewed its policy concerning such interest costs and consulted with the Office of Management and Budget (OMB). The current policy concerning such interest costs is stated below. Policy. Interest costs (either explicit or implicit) associated with lease-purchase and other capital lease arrangements are not allowable except for interest costs associated with certain buildings as noted in OMB Circular A-87, Attachment B, paragraph C2a. OMB has stated that: "With respect to other leases which create a material equity in the leased property, interest is not an allowable cost. For these leases, rental costs are allowable only up to the amount that would be allowed had the organization purchased the property on the date the lease agreement was executed; e.g., depreciation or use allowances, maintenance, taxes, insurance, but excluding interest expenses and other unallowable costs." Action. Grantees should review the principles in OMB Circulars A-87 or A-122 as codified at 41 CFR 1-15.7 and adhere to them in the operation of their JTPA programs. Questions. Address questions concerning past disallowed interest costs to your audit resolution contact person.

Reference. DINAP Bulletin No. 94-21; Federal Travel Regulations at 41 CFR 301-304; and section 401 program regulations at 20 CFR 632.38(k). Information. The Federal Travel Regulations are revised to increase the maximum lodging allowance in certain existing localities for official travel away from official duty stations by Federal employees and section 401 grantees.

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References: Training and Employment Guidance Letter (TEGL) No. 6-95, JTPA Titles II-A, II-C, and III Allotments; and Wagner-Peyser Final Planning Estimates for Program Year (PY) 1996; Emergency Supplemental and Rescission Act, 1995, Public Law 104-19; Omnibus Consolidated Recissions and Appropriations Act of 1996, Public Law 104-134; Job Training Partnership Act, Public Law 97-300, as amended; TEGL No. 5-95, Program Guidance and Allocations for the Calendar Year 1996 Summer Youth Employment and Training Program; TEGL No. 12-94 and Change 1, Changes in Restrictions on Program Year 1995 Funds under Title III of the JTPA; and TEIN No. 6-93 and Changes 1 and 2, Instructions for Title II, JTPA Quarterly Financial Status Report. Background: TEGL 6-95 provided to the States the Program Year (PY) 1996 allotments for titles II-A, II-B, II-C and III, pursuant to the Congressional appropriations to the Department. In that communication, we indicated that guidance on intertitle transfers would be forwarded separately. Policy concerning transfer rules and procedures is contained in this TEGL. In addition, in order to be responsive to the entire employment and training community, questions were solicited through the Employment and Training Administration (ETA) Regional offices. The answers to the questions received, including a reference table summarizing potential transfers for all years, are contained in an attachment to this TEGL. In the 1996 Omnibus Appropriations Act, Congress authorized the transfers of PY 1996 funds between JTPA titles II-A and III for adults and between title II-B and II-C for youth. The current authorization in JTPA sections 206, and 266 for the transfer of funds between titles II-A and II-C is unaffected. This local flexibility provided to service delivery areas (SDAs) and substate areas (SSAs) in planning and fund transfer requires the approval of the Governor prior to implementation.

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