Indirect Cost Rates. Phil Boone: MDE Office of Financial Management, State Aid School Finance

Transcription

1 Indirect Cost Rates Phil Boone: MDE Office of Financial Management, State Aid School Finance Jessica Beagle: MDE Office of Financial Management, State Aid School Finance Lori Schomisch: Clinton County RESA

2 What is an Indirect Cost Rate? A ratio representing the proportion of district expenditures used for overhead as opposed to direct costs of programs. 2

3 How is an indirect cost rate used? Adjusting grant revenue to include indirect costs. $100,000 grant with 5% rate. Program costs: $95,238 $95,238 x 5% = $4,762 $95,238 + $4762 = $100,000 3

4 Types of Rates Special Education Restricted Unrestricted Medicaid 4

5 Special Education Rate Report RO418 ISD rate is weighted average Operations and Maintenance Rate based on FID data No district input needed Published in April for current year Capped at 15% 5

6 Restricted Rate Applicable to most federal education grants Does not include ops/maint, Chief Executive Officer (CEO) or Heads of Components Supplement vs. Supplant Capped at 15% 6

7 Unrestricted Rate Applicable to federal School Lunch grants and used on Vocational Education Added Cost Report Includes ops/maint, CEO, Heads of Component costs Capped at 15% 7

8 Medicaid Rate Applies to Medicaid School Based Services grants Includes ops/maint, CEO, Heads of Component costs Capped at 25% 8

9 How are the rates calculated? Costs are drawn from district s FID, published to MDE website as report RO418A Preliminary rates are calculated on report RO418 9

10 RO418A 10

11 RO418 11

12 What should the district do? Review the amounts on the R0418A. They come directly from your expenditure trial balance/fid submission. 12

13 What should the district do? Do you want to submit additional information to MDE to adjust the rates? 13

14 What should the district do? The compelling why and considerations: 1. The Head of Component Concern (districts with more than 2,999 students) 2. Unrestricted and Medicaid rate 3. Substantial presence of federal grants 14

15 What should the district do? Unrestricted and Medicaid Rate Easy Adjustment: These are unrestricted rates. The cost of the Chief Executive Officer (and Head of Component) can be included. 15

16 Line by Line Considerations: Function codes: 1xx - Instructional 21x - Support Service Pupil 22x - Support Service - Instructional By definition, these expenses are Direct Costs. Exclusions - MDE will have already identified these exclusions: Capital Outlay (6xxx) Claims and Judgments (75xx), Cost of food (56xx) Debt and Interest related (71xx, 72xx, 73xx) Taxes Abated and Written Off (76xx) Grant Disbursement (85xx) District will have to identify exclusions for contracts in excess of $25,

17 Line by Line Considerations: Function code 231: Board of Education By definition, most Board of Ed Expenses are Unallowable Costs. (Treated like Direct Costs for the purpose of calculating indirect.) EXCEPTION: Audit and Legal Services Direct for portion charged to specific programs, remaining portion may be considered indirect (both unrestricted and restricted) if benefits all programs. District must request reclassification on DS Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx Districts will have to identify exclusions for contracts in excess of $25,

18 Line by Line Considerations: Function code 232: Executive Administration Generally, most Executive Administrative costs are Unrestricted Indirect costs but not Restricted Indirect So decrease Direct and Unallowable and increase Unrestricted Indirect on Page 2 of the DS

19 Line by Line Considerations: Function code 232: Executive Administration Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx District will have to identify exclusions for contracts in excess of $25,000. Head of Component for districts with 2,999 or more students. Those districts will need to provide input to MDE/potential reclass from 250 s and 280 s. 19

20 Line by Line Considerations: Function code 233: Grant Writer R0418A classifies these expenses as Direct. If the costs are determined to be indirect, reclassification on Page 2 of the DS is needed. (If indirect, would be both Restricted and Unrestricted.) Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx District will have to identify exclusions for contracts in excess of $25,

21 Line by Line Considerations: Function code 24x: School Admin By definition, most School Admin Expenses are Direct Costs. Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx District will have to identify exclusions for contracts in excess of $25,

22 Line by Line Considerations: Function code 25x: Business By definition, most Business expenses are Indirect Costs both restricted and unrestricted. MDE reflects this on the R0418A Reclassification needed if costs are charged to a specific grant and not identified by a state code 2xxx 8xxx (increase direct, decrease indirect on page 2 of the DS-4513) Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx. Do NOT exclude contracts in excess of $25,000 for indirect functions. 22

23 Line by Line Considerations: Function code 26x: Operations and Maintenance By definition, most O & M expenses are Indirect Costs Unrestricted only. MDE reflects this on the R0418A. Reclassification needed if costs are charged to a specific grant and not identified by a state code 2xxx 8xxx (increase direct, decrease unrestricted indirect on page 2 of the DS-4513) Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx. Excluding contracts in excess of $25,000 will impact the Restricted Rate, but not the Unrestricted and Medicaid Rate. 23

24 Line by Line Considerations: Function code 27x: Pupil Transportation By definition, most Pupil Transportation expenses are Direct Costs Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx. District will have to identify exclusions for contracts in excess of $25,

25 Line by Line Considerations: Function code 281: Planning and Research Function code 282: Communication R0418A classifies these expenses as Direct. If the costs are determined to be indirect, reclassification of Page 2 of the DS is needed. Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx. District will have to identify exclusions for contracts in excess of $25,

26 Line by Line Considerations: Function code 283: Staff & Personnel Function code 284: Technology These expenses are Indirect Costs both restricted and unrestricted. MDE reflects this on the R0418A. Reclassify on DS4513 is needed if costs are charged to a specific grant and not identified by state code 2xxx 8xxx (increase direct, decrease indirect). Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx. District will have to identify exclusions for contracts in excess of $25,

27 Line by Line Considerations: Function code 285: Pupil Accounting Pupil Accounting expenses are Direct Costs Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx. District will have to identify exclusions for contracts in excess of $25,

28 Line by Line Considerations: Function code 289: Central - Other R0418A classifies these expenses as Direct. If the costs are determined to be indirect, reclassification of Page 2 of DS-4513 is needed. Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx. District will have to identify exclusions for contracts in excess of $25,

29 Line by Line Considerations: Function code 29x: Other Function code 3xx: Community Services These expenses are considered Direct. Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx. District will have to identify exclusions for contracts in excess of $25,

30 Line by Line Considerations: Function codes 41x, 42x, 43x: Payments to Governmental Agencies Most Payments to Governmental Agencies are Direct Costs. Adjustments will be considered if costs meet the criteria for indirect costs. Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx. District will have to identify exclusions for contracts in excess of $25,

31 Line by Line Considerations: Function code 44x: Payments to Other Governmental and Not-For-Profit Entities/Subgrantee Relationships These costs are all excluded. 31

32 Line by Line Considerations: Function code 45x: Facilities Acquisition These expenses as Direct. Exclusions: MDE automatically excludes object codes 56xx, 6xxx, 71xx, 72xx, 73xx, 75xx, 76xx, and 85xx. District will have to identify exclusions for contracts in excess of $25,

33 Line by Line Considerations: Other Funds: Trust Funds are Direct Costs (exclusions identified.) Debt Service, Capital Project, Internal Service Fund are excluded. 33

34 Cost adjustments Spreadsheet form DS-4513 Exclusions on 1 st tab Re-classifications on 2 nd tab Adjustments for Heads of Components on 3 rd tab Due June 1 Submit online: 34

35 DS-4513 exclusions 35

36 DS-4513 exclusions 36

37 DS-4513 reclassifications 37

38 Final RO418 Costs adjusted by DS-4513 Posted to web Alert to district via monthly State School Aid UPDATE Under What s New heading 38

39 Online Submission Form 39

40 Final RO418 40

41 Applying/Using the Rate Accounting for the recovery of indirect costs/ memo expenditures Use fund modification function 6XX Allows district to bill grant without affecting actual cost data See document on State Aid website 41

42 Applying/Using the Rate Federal Grants require administrative effort Federal grants incur significant reporting costs Use your rates! 42

43 Applying/Using the Rate Project Costs: Salaries and Benefits 48,389 Supplies and Materials 3,221 Contracted Services 52,833 (one contract) Equipment 7,500 Total Direct Costs 111,943 Indirect Base: 111,943 less 27,833 (excess of 25,000 on contract) less capital outlay of 7,500 = 76,610 Indirect Costs = 76,610 x 10.18% = 7,799 Total Grant Costs = 111, ,799 = 119,742 CAUTION: Be Aware that Rate changes on 7/1 each year 43

44 Questions? Phil Boone Jessica Beagle Lori Schomisch