California Code, Health and Safety Code - HSC § 11818

(a)(1) Expenditures made by a county and a county's provider that may be reimbursed using appropriated funds include salaries of personnel, approved facilities and services provided through contract, operation, maintenance, and service costs, depreciation of county facilities as established in the State of California's Auditing Standards and Procedures for Counties, lease of facilities where there is no intention to, nor option to, purchase, and other expenditures that may be approved by the director.

(2) Expenditures made by a county and a county's provider that may not be paid using appropriated funds include expenditures for initial capital improvement, the purchase or construction of buildings, except for equipment items and remodeling expenses as may be provided in regulations of the department, compensation to members of a local advisory board on drug programs, except actual and necessary expenses incurred in the performance of official duties, and expenditures for a purpose for which state reimbursement is claimed under any other law.

(b)(1) Except as provided in Chapter 3 (commencing with Section 11758.10), the cost of services specified in the county contract shall be based upon reimbursement of actual costs as determined with standard accounting practices. The county may enter into contracts with providers at actual cost or a negotiated rate.The provider shall make available to the county information on prior years' actual cost of providing the services and actual revenues.