This chapter governs the provision of funding for local health services designated in Health-General Article, §2-304, Annotated Code of Maryland, and, at the discretion of the Secretary, any other State or federal funds that support these services. In this chapter, the following terms have the meanings indicated. Terms Defined. “Annual formula adjustment” means the amount calculated after applying the percentage change as determined by Health-General Article, §2-302(b)(2), Annotated Code of Maryland. “Department” means the Maryland Department of Health. “Federal non-matching funds” means federal funds made available annually by the State to a subdivision for local health services that do not require local matching funds. “Local health services” means the services specified in Health-General Article, §2-304, Annotated Code of Maryland. “Local matching funds” means the annual funding made available by a subdivision for local health services to qualify for State matching funds, plus any excess amount. “Secretary” means the Secretary of Health or the Secretary's designee. “State funds” means State matching funds plus federal nonmatching funds. “State matching funds” means the general funds made available annually to a subdivision by the State for local health services that require local matching funds. “Subdivision” means a county of this State and Baltimore City. For fiscal year 2013 and each subsequent fiscal year, each subdivision shall receive, at a minimum, the amount of State matching funds distributed in fiscal year 2012 for local health services. The annual formula adjustment and any other adjustments for local health services shall be allocated to each subdivision based on each subdivision's percentage share of State funds distributed in the previous fiscal year, and to address a substantial change in community health need, if any, as determined in the discretion of the Secretary after consultation with local health officers. As to appropriations referenced in Health-General Article, §2-302, Annotated Code of Maryland, local matching funds shall be required as a condition of any distribution to a subdivision. The local match percentage for each subdivision shall equal the percentage required for each subdivision for fiscal year 1996. An operating budget to implement each local health department's projects for the next fiscal year, funded partially or wholly from funds provided through local health services, shall be prepared in sufficient detail and submitted to the Department for the Secretary to determine the acceptability of the budget. The format, content, and submission date of the budget shall be as set forth in the annual local health department budget instructions available on the Department's website or as otherwise determined by the Secretary. Each position shall be accounted for in only one project; however, funding for a position may be split among several projects. An agreement form signed by the county executive authority and the health officer of the subdivision shall be transmitted to the Department by a date established by the Secretary for the upcoming State fiscal year. The agreement shall include, but is not limited to, the following: A statement showing the amount of the local matching funds, along with any qualifications which cover that funding; A statement indicating whether the subdivision elects to be the paying agent for items other than salaries, or requests that the Department act in that capacity, and, in the event of such a request, the names of the persons upon whose authority commitments and expenditures are authorized; and A statement indicating whether the subdivision wishes to audit those records of the Department pertaining to disbursements made on behalf of the subdivision. If the subdivision elects to make an audit as described in §D(3) of this regulation, the audit shall be done within 3 years after the close of the fiscal year that is the subject of the audit. On approval by the Secretary, the budget containing State and federal funds and the required local matching funds shall be used as the basis of operation by the health officer for State-supported services. Any substantive change in local health projects during the fiscal year is subject to Departmental review and approval, as set forth in the annual local health department budget instructions. Cash Transactions. The Department only assumes responsibility in any fiscal year for paying from its funds the State matching funds certified by the Secretary of Health in the agreement for local health services. If a subdivision elects the Department to be its disbursing agent, and the subdivision fails to deposit sufficient funds with the Department to satisfy the subdivision's share of local health services expenditures, the Department may not disburse funds for the subdivision until sufficient funds are deposited by the subdivision to meet the subdivision's financial obligations. If a subdivision elects the Department to be its disbursing agent, the Secretary may charge for the cost of the disbursement-related administrative services rendered by the Division of General Accounting. If the subdivision elects to be the disbursing agent: Disbursements shall be reported monthly to the Division of General Accounting of the Department, in the form and under the conditions as the Department may specify from time to time, in order that these disbursements may be entered on the central accounting records; Funds owed a subdivision shall be paid to the subdivision within 30 days following the end of each quarter, except that funds owed at fiscal year end shall be paid to the subdivision within 30 days following the completion of the annual cost settlement process; and Funds owed the State by a subdivision at fiscal year end shall be paid to the State within 30 days following the completion of the annual cost settlement process. Purpose of Expenditure. State funds and local matching funds may only be expended if the activity to be funded is: The responsibility of the local health officer, the Secretary, or the Secretary of the Environment, as established by the general public laws of Maryland; Delegated to the local health officer by the Secretary or the Secretary of the Environment; and With respect to §A(1) and (2) of this regulation, not budgeted for separately in the State budget. Procurement. If authorized by the principal executive or legislative authority of the subdivision's government in accordance with local ordinance, a local health department may use either the State procurement system or the procurement system of the subdivision in which the local health department is located. In the absence of such authorization, a local health department shall use the State procurement system in accordance with State Finance and Procurement Article, Annotated Code of Maryland, and COMAR Title 21. Expense Accounts. Amounts spent to reimburse personnel for travel expenses in accordance with COMAR 23.02.01 are eligible for State matching funds. Employee Fringe Benefits. The employer's payments for Social Security, retirement systems, health insurance, and unemployment insurance are eligible for State matching funds. Revenues. Amounts collected in accordance with COMAR 10.02.01 as the result of services rendered as part of local health services shall be treated as a reduction of expenditures for the corresponding project. Amounts collected by subdivisions shall be reported monthly to the Department. Interest. A subdivision shall: Deposit the collections and funds allocated to support local health services in a federally insured interest-bearing account when these funds are not required to meet current local health services expenses; and Treat interest income from the local health service revenues which generated the interest as a reduction of expenditures for the local health service which generated the interest. Prohibited Expenditures. State matching funds may not be used to support the following categories of expenditures: Hospitalization of clients; Equipment and appliances for individuals; Salary supplements; Utilities; Janitorial expenses; Landscaping; or Other items the Secretary may specify. State matching funds may not participate in the capital costs of or improvements to the physical facilities in which local health department operations are conducted. This regulation applies regardless of the manner in which this cost is defrayed including but not limited to rental, lease, and direct payment of contract for construction or installation. State matching funds may not be used to defray the cost of debt service if the construction or improvement is financed by the creation of a long-term debt. Insurance, Repair, and Maintenance of Physical Assets. The cost of insuring, repairing, or maintaining physical assets, the provision of which under this chapter is the responsibility of the subdivision, is not eligible for State matching funds. Reimbursement for Injuries. Amounts paid as compensation for injury incurred in the line of duty, and injury other than as a result of malpractice occurring on the premises of a facility of a local health department, as well as the cost of insuring for this liability, are eligible for State matching funds. Audits. All Department records of disbursements relating to local health department activities are available for audit by representatives of the county, if they so elect, as provided in Regulation .05D(3) and E of this chapter. All records of disbursements and revenues of the counties relating to local health department activities shall be available for audit by representatives of the Department for at least 5 years following the close of each fiscal year or until audited by the State, whichever comes first. Health-General Article, §§2-104(a), 2-105, 2-301—2-305; State Finance and Procurement Article, §12-109; Annotated Code of Maryland Effective date: July 1, 1956 Chapter revised effective March 20, 1989 (16:5 Md. R. 628) Chapter revised effective January 2, 1994 (20:26 Md. R. 2027) Regulation .03 amended effective September 23, 1996 (23:19 Md. R. 1376) Regulation .04 amended effective September 23, 1996 (23:19 Md. R. 1376) Regulation .07D amended effective May 22, 1995 (22:10 Md. R. 708) Regulations .01—.09 repealed and new Regulations .01—.06 adopted effective February 26, 2007 (34:4 Md. R. 400) Regulation .03B amended effective April 21, 2008 (35:8 Md. R. 804) Chapter revised effective November 14, 2011 (38:23 Md. R. 1421)