Government per diem rate policy example

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Overview

It is common for local government employees, elected and appointed officials, and others (such as advisory board members or volunteers) to incur business and travel-related expenses in their official capacity working on behalf of the jurisdiction. (For simplicity’s sake, we will refer to all of these employees, elected officials, etc. as “employees” unless otherwise noted.)

In some instances the local agency may pay for these expenses through a centralized procurement/accounts payable system, advanced travel imprest accounts, or the use of a government-issued credit card. In other cases, the employee may incur the expenses out-of-pocket and seek reimbursement from the local agency. To address these various situations, the agency should have appropriate policies in place.

Sometimes travel and expense reimbursement policies are adopted as stand-alone documents, while other times they may be incorporated into other local policies such as a personnel policy or elected officials’ handbook.

Practice Tip: Help your elected officials avoid embarrassment by coaching newly elected officials about your travel and expense reimbursement policy and answering any questions they may have.

Statutory Authority

RCW 42.24.090 is the general statute authorizing reimbursement of expenses incurred by “officers and employees of any municipal corporation and subdivision of the state.” That statute also allows for other reimbursements in lieu of actual expenses incurred (such as per diems, mileage reimbursements for use of a personal vehicle, or hourly or monthly allowances or other basis that the legislative body determines to be proper).

In addition, there are several other statutes that apply only to specific agencies or officials. For instance:

• Code cities: See RCW 35A.13.040 (council-manager form) and RCW 35A.12.070 (mayor-council form) for reimbursement of councilmembers and mayors.
• Counties: For county officers, RCW 36.17.031 references to RCW 42.24.090 (discussed above).
• Fire protection districts: See RCW 52.14.010(2) for reimbursement of commissioners.
• Park and recreation districts: See RCW 36.69.110 for reimbursement of commissioners.
• Port districts: See RCW 53.08.175 and 53.08.176 for general reimbursement of officials, employees, and commissioners and RCW 53.36.140 for promotional hosting reimbursement.
• Public facilities districts: See RCW 36.100.120 and RCW 35.57.050 for reimbursement of officers and employees.
• Public hospital districts: See RCW 70.44.050 for reimbursement of commissioners.
• Public transportation benefit areas: See RCW 36.57A.050 for reimbursement of the legislative authority, which references RCW 43.03.050 and RCW 43.03.060.
• Public utility districts: See RCW 54.12.080(4) for reimbursement of commissioners.
• Water-sewer districts: See RCW 57.12.010 for reimbursement of commissioners.

There may be additional local government examples not listed here.

These statutes provide fairly broad authority. Many of these statutes provide for reimbursement of “necessary” and/or “reasonable” expenses. However, it is not always clear what constitutes a “necessary” or “reasonable” expense. Some expenses (such as trainings and conferences to obtain necessary certification credits) may seem self-explanatory, but others (such as meals) may not.

There is separate statutory authority authorizing “advance travel” funds (RCW 42.24.120 - .160) and the use of official government credit cards for travel expenses (RCW 42.24.115). The State Auditor’s Office provides guidance on Employee Travel in Section 3.8.2 (see Cash Basis and GAAP manuals), which states:

The legislative body of each municipality must pass an ordinance or resolution to establish rules and regulations for the reimbursement of travel expense. There should be rules to cover all municipal officials and employees. The ordinance or resolution should discuss the municipal policy on tipping, charging expenses to the municipality, and it should prohibit reimbursement for personal expenses and entertainment.

Federal Tax Implications

It is possible that certain reimbursements may be considered as taxable compensation under the federal tax code, in which case they may be subject to income tax and FICA withholding. The Internal Revenue Service (IRS) has provided increasingly clear guidance on the types of employee reimbursements that might be considered as compensation.

Basically, if an item isn’t specifically identified as exempt from compensation for federal tax purposes, then it should be considered taxable. There are exemptions for employees when in “travel status” on official business, de minimis meals (those expenses for which accounting is not reasonable or practical due to how small the expenses are in relation to the frequency that they are incurred), etc. It is not our intent to provide federal tax law guidance here, but rather a high-level summary of the issues. For more detailed guidance on taxable compensation, refer to IRS Publications 15-B and 463.

Key Components of Travel and Expense Reimbursement Policies

Effective travel and expense reimbursement policies should address a number of different situations. For the purposes of our guidance, we have divided these policies into the following major policy areas, discussed in more detail below along with key questions to consider for each one:

• Authorized individuals
• Authorized expenses
• Transportation
• Meals and lodging
• Methods of payment
• Documentation and internal controls

Authorized Individuals

Your policy should clearly state who is (and is not) covered. Local governments typically reimburse employees (paid staff members) for travel or business-related expenses. However, there may be different considerations for elected officials or volunteers that require you to adopt different policy approaches.

Key questions to consider:

• Who does the policy apply to? In addition to staff members, does the policy cover elected and appointed officials? Board or commission members? Volunteers?
• Do you need different policies/procedures for elected officials? For example, elected officials may spend significant amounts of time meeting with constituents outside the normal workplace or work hours. Similarly, you might provide a standard monthly vehicle allowance for certain elected officials who consistently and frequently use their personal vehicles for government business, rather than tracking their actual miles driven. If there are differences, your policy should either clearly identify the differences or refer to an alternative policy. For instance, some jurisdictions adopt two separate reimbursement policies, one for employees and one for elected officials.
• Do you need different policies for volunteers? Often agencies will reimburse certain categories of volunteers for their out-of-pocket expenses related to their volunteer efforts. This can be consistent with the agency’s basic reimbursement policies, or your jurisdiction can adopt a unique policy applying solely to volunteers.

Authorized Expenses

It is important for your policy to clearly establish what types of expenses are reimbursable and what expenses are not. Some local governments have very strict views on what is a reasonable and reimbursable expense, while others are more relaxed. For instance, some jurisdictions only pay for meals in travel status, while others may pay for meals in certain non-travel situations. Likewise, some allow for certain incidentals during travel (such as valet service or dry cleaning), while others may not.

Your policy should clearly establish the general rules for travel and business expense reimbursement, as well as any exceptions to the normal rules. Remember that reimbursable expenses should serve a fundamental public purpose and be reasonable. It can be helpful to provide examples of allowable and non-allowable expenses, as problems can arise when an employee substitutes their own judgment as to what is “reasonable.”

Key questions to consider:

• What is a “reasonable” expense? Different people will have different ideas of what is “reasonable,” so it helps if your policy is as clear as possible and provides examples of what types of expenses are and are not covered.
  • You might consider including a “reasonableness test” in your policy. For instance, would the average, reasonable resident agree that the expense was a legitimate use of their taxes? Would you feel comfortable if the expense was selected for audit, if it appeared in the newspaper, or justifying it to a citizen?
  • Meals or light refreshments while working (either in meetings or where the duties preclude traditional access to personal meals);
  • Mileage reimbursement, tolls, or parking fees for attending meetings;
  • An official cell phone;
  • Annual dues for professional or civic organizations that directly relate to the employee’s job and benefit the agency;
  • Moving expenses for certain high-level or hard-to-fill positions; and/or
  • Internet connections and vehicle allowances for elected officials.
  • First class or business class airfare, if cheaper economy or coach fares are available;
  • Alcoholic beverages;
  • Fines, forfeitures, tickets, or penalties;
  • Long distance phone calls from hotel rooms;
  • Expenses incurred by a spouse, family member, or other person not authorized under the agency’s policies;
  • Travel insurance; and/or
  • Theft or loss of personal items while traveling. (Absent a policy, such losses would be left to a case-by-case determination which may not treat each situation or employee equitably.)

  Transportation

  Different trips and destinations may require different modes of transportation such as renting a car, using a personal vehicle, taking a bus, or traveling by plane, each of which has its own unique considerations.

  Key questions to consider:

  • What modes of transportation are appropriate? The transportation mode(s) should generally be cost-competitive – that is, if an employee has a choice between two comparable modes of transportation, the employee should generally choose the cheaper option (although consideration should also be given to the employee’s schedule and transit time).
  • Are you required to pay employees for travel time? Under Washington state law, which is stricter than federal law, nonexempt employees who are traveling out-of-town on authorized business must be paid for all travel time (such as time spent driving to the destination, waiting at airports, in flight, or traveling from the airport to the hotel), even if the employee is not actively working during those hours or such travel takes place outside of the employee's normal work hours. Such travel time could also incur overtime wages. See the Department of Labor and Industries Administrative Policy ES.C.2 Hours Worked, affirmed by the state appeals court decision Port of Tacoma v. Sacks(2021). Exempt employees are not required to be paid for travel time; see our Overtime and Comp Time page for more information on classifying exempt and nonexempt employees.
  • What incidental transportation expenses are covered? Potential topics for consideration include parking fees, tolls, priority airline boarding, checked bag fees, upgraded seats, in-flight Internet or entertainment fees, TSA PreCheck or U.S. Customs Trusted Traveler program fees, and additional expenses incurred due to delays, cancellations, or changed itineraries.
  • What vehicle use is appropriate? Many jurisdictions have official government vehicles that employees can use. In cases where personal automobiles are used, agencies typically reimburse employees for mileage according to the IRS standard mileage rates, which are updated every year and apply to all automobile types (including gasoline-powered, diesel, electric, and hybrid). However, the policy should be clear that normal commuting miles will not be reimbursed. You also may want to require drivers to present current proof of insurance for any personal vehicle that will be used on official government business.
    • Employees should consider whether rental cars are necessary or whether other transportation can be used (such as a bus or a free shuttle service from the hotel). If a rental car is necessary, your policy should clearly state what car insurance coverage is provided by the agency and what coverage should be provided or purchased by the employee.
    • Many policies also encourage or require employees to carpool when attending the same event.

    Meals and Lodging

    When an employee is in travel status, some jurisdictions use a “per diem” (or daily allowance) for meals and/or hotels, typically following the U.S. General Services Administration (GSA) per diem rates (summarized in a nice map on the Washington Office of Financial Management website). Other jurisdictions use “actual costs” and will only reimburse the employee for the actual expenses incurred.

    Per diems have several advantages, including eliminating the need to submit or review receipts for relatively small purchases and avoiding potential disputes and differences of opinion over what constitutes a “reasonable” cost for a meal or hotel room. Some jurisdictions also use prepaid cards to issue per diem.

    In some cases a combination of methods can be used, such as per diem for travel to certain events or locations and actual expenses for all other travel, or at the discretion of the approving official. Other policies might reimburse actual expenses up to a certain maximum amount, such as the GSA per diem rates.

    The issue of meal expenses also arises in certain non-travel situations. In 1987, the state Attorney General’s Office issued a memorandum on Eating and Drinking at Public Expense, addressing both travel-related and non-travel meal expenses. This memorandum, while over 30 years old now, is still the leading authority on questions related to municipalities paying for food and drink, and it goes into considerable depth on the issue and includes various scenarios for eating and drinking at public expense along with explanations of when and why it may or may not be justified. It also states that “the enactment of an appropriate authorizing local legislation is a prerequisite, because expenditures of this type must be affirmatively authorized by law. See James v. Seattle, 22 Wash. 654 (1900)”.

    Key questions to consider:

    • Will you use a per diem, actual costs, or a combination of the two? If you are using actual costs, the employee must provide an itemized receipt of all expenses showing that the expenses comply with the policy and that, for instance, no alcohol was purchased.
      • Your policy should be careful to adjust meal reimbursements to account for any meals already provided. For instance, if breakfast or lunch is included with a conference registration or hotel stay, the per diem for that day should be reduced accordingly or, if using actual costs, reimbursement should be disallowed for that meal should the employee choose to purchase a meal separately.
      • Questions have arisen about what constitutes a “meal” – for instance, does bagels and coffee count? Make sure your policy is clear or at least provides a way to adjudicate a dispute over whether bagels and coffee were actually “breakfast.”
      • Overnight stays;
      • Time before a domestic or international flight;
      • Travel that extends the employee’s scheduled work day by a certain number of hours; and/or
      • Travel that takes the employee more than a certain number of miles from their normal workplace or home (excluding the normal commute).

      Methods of Payment

      Some business expenses may be paid for in multiple different ways, such as reimbursement or an official government credit card. Travel expenses in particular may involve multiple forms of payment. For example, registration fees and airfare might be paid through an accounts payable voucher or a government credit card, incidental expenses might be paid by the traveling employee and reimbursed, and the employee may have requested an “advance travel” payment for certain expenses. Your policy should clearly state what methods of payment are authorized for which types of expenses.

      The different payment methods can make it complicated to track the various payments and reimbursements for a single business trip. This creates a risk of paying for the same expenses more than once through different channels. In many cases, a travel pre-approval process is helpful to clarify the form of payment and/or reimbursement.

      The policy should be clear that official government credit cards should not be used for personal (non-reimbursable) expenses, even if they are intended to be repaid prior to the entity’s payment of the credit card statement. See the BARS Manual section 3.8.4.40 on Purchase Cards (Cash Basis and GAAP manuals), as well as a 2011 informal opinion letter from the state Attorney General’s Office.

      Key questions to consider:

      • What methods of payment are acceptable in what situations? When should employees file for expense reimbursement? When should they use an official government credit card? Are there certain expenses, such as hotels and airfare, that should be arranged by a procurement officer? Are there certain expenses that should not be allowed for certain payment methods? For instance, some policies prohibit the use of government credit cards for meals and require the use of reimbursement instead.
      • What are the requirements for using an official credit card? Local governments often adopt a separate credit card use policy regarding authorized users, allowable expenses, required documentation, etc. For more guidance, see our Credit Card Use Policies page.
        • Note that the use of official government credit cards for business travel must comply with RCW 42.24.115, requiring employees to submit fully itemized travel expense vouchers upon billing or no later than 30 days of the billing date and providing for repayment/withholding of any unauthorized expenses incurred.
        • If your policy allows the use of loyalty programs, you should be clear that your agency will not incur any extra costs as a result. For instance, if the employee buys a first-class plane ticket to get bonus miles, the agency should only provide reimbursement for the cost of an economy plane ticket and the employee should pay the difference.
        • Issues can also arise if an employee uses their existing rewards points to “purchase” a plane ticket or hotel room while traveling on government business, essentially obtaining the service for free, and then files for reimbursement. It can be difficult to determine the correct amount of reimbursement, since the employee used their personal credits but has not incurred any actual out-of-pocket costs. Some agencies limit reimbursement to only the actual out-of-pocket expenses for this reason. Others might allow for alternate expense calculations, although such calculations must be very clearly authorized by the travel policy. Similar considerations apply to meals or other items purchased with a coupon for free or at a reduced price.
        • Some agencies have attempted to obtain reward program credits for travel incurred by their employees that can then be used for other employees, but agencies have generally found that this is difficult to administer and is not cost-effective.

        Documentation and Internal Controls

        Before any reimbursement is issued, the employee must submit proper documentation, and if proper procedures are not followed the employee may be ineligible for reimbursement or have to repay the agency for expenses already incurred. Your policy and procedures should clearly identify the required approval processes and timelines. The entity’s auditing officer is responsible for reviewing the documentation to substantiate the purpose of the expenditure (see RCW 42.24.080 and 42.24.090).

        Travel expenses in particular can create opportunities for misuse of public funds. Traveling employees sometimes incur voluntary hotel costs, meal expenses, and other charges that are not related to the purpose of the travel. Common examples include the extra expenses (if any) of a non-governmental traveling companion (such as a spouse or significant other), non-business incidentals such as hotel room movie rentals, and extending a business trip to include personal vacation time and expenses.

        Reimbursement requests and documentation should be submitted in a timely manner. Delayed requests can lead to problems such as loss of documentation or clarity of the business purpose, confusion over the authorization to incur such expenses, problems recording expenses in the correct accounting or budget period, and conflicts over employees seeking reimbursement for “stale” expenses that are months or even years old.

        To avoid these issues, your policy should establish a reasonable time limit to submit any claims for reimbursement. For employees who incur travel-related expenses on an official government credit card, state law requires fully itemized travel vouchers to be submitted upon billing or no later than 30 days of the billing date (RCW 42.24.115). While this only applies to the use of official government cards, it is also a good general rule to follow for reimbursing other travel and business expenses. For advance travel, fully itemized receipts must be submitted within 15 days after the travel period ends (RCW 42.24.150).

        Key questions to consider:

        • Is preapproval required? Many jurisdictions require a travel authorization form to be submitted in advance of travel, including estimated costs. Certain situations might require additional approvals or be approved at a higher level of management, such as out-of-state or international travel, travel that would require the payment of overtime, or travel exceeding a certain dollar threshold. Reviewers should conduct research to ensure that the employee is getting a reasonable price.
        • What supporting documentation is required? To claim reimbursement, employees generally must submit a detailed travel expense voucher following the conclusion of the trip, with proper documentation of expenses (see RCW 42.24.090 for travel reimbursements, RCW 42.24.115 for travel credit cards, and RCW 42.24.150 for advance travel). In addition to itemized receipts, employees might submit conference agendas or itineraries so that a reviewer can determine if there were extra (non-reimbursable) days or hotel meals included in the trip. For clarity and to avoid accidental duplicate payments, the travel expense voucher should include all costs incurred on the trip as well as the payment method for each expense.
        • How will you address exceptions to the policy? Any exceptions to the normal travel policy, such as costs above the normal per diem amounts or an early arrival/late departure resulting in a longer hotel stay, should be pre-approved and should have a clear business purpose. At other times, an employee might incur an expense that would not ordinarily be reimbursable, but the employee may believe the expense should be reimbursed due to unique circumstances. Sometimes an exception is in order, in which case your policy should establish a method for approving exceptions. This could be as simple as getting approval from a majority of the council or an appeal process through a senior administrative official.
        • Who will review reimbursement requests, including requests submitted by elected officials and senior management? To ensure accountability, it is important to establish a clear approval hierarchy. For instance, ordinary staff reimbursement requests might be approved by the department director, requests from department directors might be approved by the city manager, and requests from the city manager might be reviewed by the mayor.
          • It can sometimes be challenging for city staff to audit and evaluate the merits of expenses incurred by elected officials in their duties. An elected official might have a different perspective on what is “reasonable” than that which would apply to a staff member. Consider having a different protocol for reviewing elected officials’ expenses, such as a review by the finance committee or an officer of the elected body (such as the council president, mayor, or other designated commissioner or board member).

          Examples of Travel and Expense Reimbursement Policies

          Below are selected examples of travel, meal, and expense reimbursement policies adopted by local governments in Washington. Some jurisdictions adopt comprehensive travel and expense reimbursement policies addressing both travel and non-travel situations, while others adopt separate policies for travel expenses and non-travel business expenses.

          Cities

          • Bingen Travel and Meal Reimbursement Policy (2012)
          • Lacey Reimbursement for Expenses Incurred in Conduct of City Business (2022)
          • Longview Business & Professional Development Travel and Related Expense Policy (2018)
          • Lynnwood Travel and Expense Reimbursement Policies (2023) – Includes provisions for elected officials, employees, board/commission members, and volunteers; also includes travel advances and non-travel meal expenses.
          • Mukilteo:
            • Meals with Meetings Policy and Procedures (2019) – Includes meal request form.
            • Travel Policy and Procedures (2019)
            • Advance Travel Policy (2019)
            • Travel Expense Reimbursement Policy (2019)
            • ProCard Travel Guidelines (2019) – Lists required documentation if using ProCard for travel-related expenses.
            • Business Expenses Policy (2024) – Addresses non-travel expenses, including meals/refreshments, ceremonies/celebrations, expenses funded by grants, and parking expenses; contains a description of what is considered an excessive expense.
            • Travel Policy (2024)

            Counties

            • Benton County:
              • Travel Policy (2021)
              • Office of Public Defense Travel Policy (2018) – Applies to travel by contract attorneys and investigators, out-of-town witnesses and retained experts, and anyone else who seeks travel reimbursement.
              • Business Expense Reimbursement Policy (2019) – For all non-travel expenses.
              • Travel Expense Reimbursement Policy (2019) – Includes advance travel and executive vehicle/cell phone allowances.
              • Procurement & Payables Travel Guide (2022) – Supplements county travel policy and describes procedures for overnight travel, including travel requests, booking, expense reports, and other related topics.

              Special Purpose Districts/Departments

              • Columbia Irrigation District Travel Authorization and Reimbursement Policy (2018)
              • East County Fire & Rescue Travel Expense Policy (2019)
              • Kittitas Valley Fire and Rescue Travel Policy (2014)
              • North Mason Regional Fire Authority Travel and Expense Reimbursement Policy (2014)
              • Port of Port Angeles Travel and Meals Policy (2018)
              • San Juan Water District Board Member Compensation Policy (2018) – Applies to board members only; includes travel and expense reimbursement.
              • Tukwila Pool Metropolitan Park District Travel and Reimbursement Policy (2024) – Applies to employees and volunteers. All reimbursements are based on actual expenses incurred; district does not reimburse on a per diem basis. Includes travel reimbursement form.
              • Union Gap Fire Department Tuition Reimbursement Policy (2009) – Provides for reimbursement for training courses related to a specific department job or function.

              Examples of Travel and Expense Reimbursement Forms

              Below are examples of selected business and travel expense forms. Forms should be carefully designed for compliance with the jurisdiction’s adopted policies. Such forms can clarify whether prior approval was obtained (if required by policy), clarify which methods of financing the travel were used (such as reimbursement, government credit card, advance travel, or accounts payable), and provide for necessary review prior to issuing reimbursement.

              Travel Authorization/Reimbursement Forms

              • Bingen Travel/Conference Request and Accounting Forms (2013)
              • Ferndale Travel Authorization and Request for Advance Travel Expenses Form (2024)
              • King County:
                • Travel Authorization and Reimbursement Form (2017)
                • Travel Pre-Authorization and Cash Advance Form (2012) – Older form, but still a useful example.
                • Travel Authorization Form (2017) – Includes instructions for advance travel.
                • Employee Claim for Expense Form (2019) – Excel file; includes instruction tab and standardized mileage figures for various destinations.
                • Travel and Training Authorization Form (2019) – Includes methods of payment and justification for using rental vehicle or exceeding lodging per diem.
                • Recruiting Expense Form (2019) – Requesting travel expense reimbursement for job candidates.
                • Business Expense Report (2019) – Excel file. Includes three tabs: one for submittal, one with instructions, and one with sample expenses filled out.
                • Request to Attend Training/Conference (2011)
                • Expenses to be Paid Form (2019) – Excel file; includes credit card purchases and reimbursement.

                Lost/Missing Receipt Affidavits

                • Mill Creek Lost Receipt Affidavit (2018)
                • Poulsbo Lost Receipt Affidavit (2019)
                • Shoreline Lost Receipt Affidavits (2019) – Includes separate form for itemized meal receipts.
                • Tukwila Lost Receipt Affidavit (2019) – Must certify that vendor has been contacted and cannot provide a duplicate receipt.

                Recommended Resources

                • WA Office of Financial Management: Per Diem Rates for Washington State
                  • U.S. General Services Administration (GSA): Per Diem Rates for the Contiguous United States
                  • Best Practices for Travel Expenditures
                  • Cash Basis BARS Manual, 3.8.2 Employee Travel
                  • GAAP BARS Manual, 3.8.2 Employee Travel
                  • Fringe Benefit Guide – Training on taxable employee fringe benefits related to travel and non-travel issues.
                  • Publication 15-B – Employers Tax Guide to Fringe Benefits
                  • Publication 463 – Deductible Travel, Entertainment, Gift, and Car Expenses
                  • Standard Mileage Rates – Applies to all automobiles including gasoline-powered, diesel, electric, and hybrid.