Federal Indirect Cost Rate Proposals

1. Federal Indirect Cost Rate Proposals ALASBO Power Lunch Presentation November 2011

2. Overview • Indirect Cost Proposals • Submittals • Definitions • Completing the forms

3. Indirect Cost Proposals • An indirect cost rate is a means of determining in a reasonable manner the percentage of allowable general administrative expense that each federal grant should bear. • Generally, an indirect cost rate is the ratio of total indirect costs to total direct costs, based on the Local Education Agencies (LEA’s) actual expenditures, exclusive of any extraordinary or distorting expenditures such as capital outlay and major subcontracts.

4. Submittals • LEA’s are not required to submit an indirect proposal. However if they do not, they will not be allowed to recover any indirect costs for the administration of federal grants. • LEA’s are responsible for submitting their proposals annually to the Department of Education & Early Development.

5. Submittals • Until the Department approves a rate the LEA will not be able to claim indirect costs on federal grants. • Proposals will be required to be submitted electronically to Meridith Boman at Meridith.Boman@alaska.gov • Signature pages will still need to be submitted with copies of your proposal and any support documents. (mail, fax, pdf) • Completed forms are due by December 31st of each year.

6. Definitions • Indirect Costs – costs of a general nature which are not readily identifiable with the activities of the grant but are, nevertheless, incurred for the joint benefit of those activities of programs of the organization. • Expenditures cannot be classified as indirect if they are either program specific or site specific.

7. Definitions • Direct Costs - a direct cost is one that is incurred specifically for one activity and can be identified specifically with that activity. • Disallowed Costs - OMB Circular A-87 classifies certain items of cost as disallowed which means that federal funds cannot be used for these purposes. These are costs directly attributable to governance. • For indirect rate computation purposes, these costs are combined with direct costs.

8. Definitions • Excluded Costs - Certain items are classified in OMB Circular A-87 as extraordinary or distorting expenditures and are excluded from the computation of the indirect cost rate. • Excluded costs in this category include • capital outlay, debt service, transfer of expenditures, internal funds, PERS/TRS on-behalf payments, food and milk supplies, and equipment. • For indirect rate computation purposes, these costs are excluded.

9. Completing Forms • Forms are available to download on the department website. http://www.eed.state.ak.us/forms/home.cfm • If you have difficulty downloading the forms from the website contact Meridith Boman and she will email the forms to you. • An instruction page has been included for reference in completing the required forms.

10. Completing Forms • Schedule A Tab – This sheet is completed by the district with information from your audit. The instructions tab will assist you with what information is needed. • Excludable Costs Tab – This sheet is completed by the district with information from your audit. The instructions tab will assist you with what information is needed. The totals in this tab are linked to the Schedule A tab and will automatically fill in.

11. Completing Forms • O&M Indirect Tab – On this tab is the Operations and Maintenance Director Guidelines. Districts will be required to complete this tab, or its equivalent in order to include indirect for the Operations and Maintenance Director, if applicable.

12. Completing Forms • Operations and Maintenance Guidelines – The item that will be allowed to be included as indirect in Operations and Maintenance is an organization(district)-wide Maintenance Director’s salary and benefits less any PERS/TRS on-behalf payments, if your district meets the requirements set forth for the inclusion.

13. Completing Forms • Maintenance Director Guidelines 1. Only one position/person is allowed. Substitutes and temporaries are not allowed. 2. Standard benefits are allowed. PERS/TRS on-behalf payments must be removed. 3. This positions only function is the oversight and management of the Operations and Maintenance Division, which in turn serves the entire organization.

14. Completing Forms • Maintenance Director Guidelines (cont.) 4. If this positions function is not as described in (3) above, the inclusion is not allowed. 5. A new tab is added to the Indirect Proposal Worksheet for the districts to show the Director’s salary and benefits to be included as indirect. This sheet , or the equivalent, will be required to be completed in order to include the indirect expense.

15. Completing Forms • Maintenance Director Guidelines (cont.) 6. By signing the Certification page your district certifies that you meet the guidelines stated above for inclusion of Operations and Maintenance as indirect. Other items in Operations and Maintenance such as Electricity, Heating Fuel, Insurance, Garbage, Janitorial Services and Supplies are not allowed.

16. Completing Forms • Schedule C Tab – This sheet requires no input from the district. This sheet calculates your rate based on a fixed rate with carry forward provision. This means that your rate is fixed for a specified future period based on an estimate of that period's level of operation. However, when the actual costs of that period become known, the difference between the estimate and the actual costsare carried-forward as an adjustment to a subsequent period.

17. Completing Forms • Certification Sheet – This sheet will fill in with your calculated rate from Schedule C. This sheet will need to be printed out and signed by the superintendent, then submitted with all copies and support documentation. (mail, fax, pdf)

18. Contact Information • Meridith Boman Department of Education & Early Development 801 West 10th Street, Suite 200 P.O. Box 110500 Juneau, AK 99811-0500 907-465-8683 907-463-5279 (fax) Meridith.Boman@alaska.gov