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(b) The department shall adopt regulations necessary to carry out the provisions of AS 47.40.011 — 47.40.091, including regulations establishing the procedures to be followed in awarding grants, the types of services for which payment may be made, costs that may be paid with grant money, and the method of payment. (c) Services of jails and other penal institutions may not be included in services purchased by the state under AS 47.40.011 — 47.40.091. Sec. 47.40.020. Licensing and supervision. [Repealed, § 7 ch 119 SLA 1984.] Sec. 47.40.021. Licensing and supervision. Facilities providing services that are purchased by the department under AS 47.40.011 — 47.40.091 shall, if required by the department, be licensed and supervised under AS 47.32. Sec. 47.40.030. Required accounting procedures. [Repealed, § 7 ch 119 SLA 1984.] Sec. 47.40.031. Required accounting procedures. Facilities that solicit or receive grants from the department for the cost of services provided under AS 47.40.011 — 47.40.091 shall (1) meet accepted standards of fiscal accountability for public money and shall, upon request, submit to the department and to the division of legislative audit a complete financial statement prepared by an independent certified public accountant; (2) keep records of the expenditures for the services provided, using cost-accounting procedures in accordance with department regulations; (3) upon request, furnish the department and the division of legislative audit all fiscal information, books, records, and accounts pertaining to services paid for under AS 47.40.011 — 47.40.091. Sec. 47.40.040. Determination of full cost of services. [Repealed, § 7 ch 119 SLA 1984.] Sec. 47.40.041. Grants. (a) The department shall award grants in accordance with its regulations. The department may award grants for periods not to exceed three years. The department may adjust grant amounts annually, using a cost-of-living allowance formula adopted in its regulations. Grant awards are subject to legislative appropriation. If insufficient money is appropriated to fund all grants awarded, the department shall prorate grant amounts, reduce the number of beds contracted for, or otherwise adjust grants to the extent of the appropriated funds. (b) Notices published by the department concerning the opening of the application process for a grant award must specify the geographical area in which services are needed, the type of services, the number of beds anticipated to be needed, the maximum number of days of care, and any other requirements established by the department. Grants authorized under this section are exempt from AS 36.30 (State Procurement Code). (c) Grants may not include payment for (1) costs, including salaries and fees, incurred in raising funds or lobbying;