(a) Start-up costs specified in Education Code Section 8275, not to exceed fifteen percent (15%) of the annual contract amount.

(b) Close-down costs for Migrant Programs as specified in Education Code Section 8233.

(c) Administrative costs, not to exceed fifteen percent (15%) of net reimbursable program costs. Such costs include activities that do not provide a direct benefit to the children, parents, or providers.

(d) Employee compensation, including fringe benefits, and personal service contracts.

(e) Equipment and equipment replacement with prior Child Development Division approval if required in the annual child development contract.

(f) Improvement of sites and adjacent grounds to meet or continue to meet Title 22 California Code of Regulations, Community Care Licensing Standards. Reimbursable improvements are those that:

(g) Taxes, insurance, and maintenance for buildings and/or equipment.

(h) Depreciation based on the useful life of an asset using a straight line method from the original date of acquisition. Depreciation shall not be claimed on land, donated assets or assets purchased with public funds.

(i) A use allowance for buildings and improvements, computed at annual rate not to exceed two percent (%) of acquisition costs. A use allowance for equipment computed at an annual rate not to exceed six and two-thirds percent (6 2/3%) of acquisition costs. A use allowance shall not be claimed on assets purchased with contract funds or on land, and shall not be claimed for assets for which depreciation has been claimed.

(j) Travel and per diem expenses, including approved out-of-state travel, at rates not to exceed those rates paid to the majority of State Department of Education's represented employees computed in accordance with State Department of Personnel Administration regulations, Title 2 California Code of Regulations, Subchapter 1. The Child Development Division shall notify the contractor of a change in expense rates within thirty (30) calendar days after the Child Development Division has received notification of a change in rates from the State Department of Personnel Administration.

(k) An indirect cost rate based on an approved cost allocation plan, not to exceed the rate specified in the annual child development contract.