Q: What are indirect costs?
Indirect costs represent the expenses of doing business that are not easily identifiable but are necessary for the general operation of the organization and the conduct of activities it performs.For example, costs like heat, light, accounting and personnel might be charged directly if little meters could record minutes in a cross-cutting manner. In other words, indirect costs are those costs that are not classified as direct. Direct costs can be identified specifically with particular cost objectives of a grant award or contract. Direct costs generally include expenses such as materials, supplies and equipment purchased solely for use on a specific grant award or contract.
Q: What is an indirect cost rate?
An indirect cost rate representsproportions of Departmental administration costs each programs should incur. If you look at the indirect cost rate as an equation, the indirect costs would be numerator and the direct costs from the denominator. The equation represents the ratio between the total indirect costs and benefiting direct costs.
Q: Do LEAs fall under the same guidelines as state and local government?
Yes, LEAs do fall under the same guidelines as state and local governments. You can look it up on the Internet. The address is:
Select "State and Local Governments." Then select "OMB Circular A-87."
Q: Does the U.S. Department of Education negotiate indirect costs with States and States in turn negotiate indirect cost rates with districts??
Yes. The U.S. Department of Education (ED) delegates LEA indirect cost oversight authority to the individual State Education Agencies. This means that after the ED Indirect Cost Group approves their rate determination procedures and policies SEAs can set indirect rates for their own school districts.
Q: How does an indirect cost rate benefit an organization?
Departmental administration costs are necessary for any program to exist. By using an indirect cost rate, LEAs have a standardized, efficient way to recover a share of administration costs from individual programs.
Q: How do I know what rate to use in what year?
The approved listing of indirect cost rates indicates in what fiscal year the rates are to be used. DBI data for a particular fiscal year produce indirect cost rates that are used in the second subsequent fiscal year (e.g., 2010–11 data produce indirect cost rates that are used in 2012-13).The rate should be used in the year the funds are expended, which is not necessarily the same as the year the funds are appropriated, received, or encumbered.
Q: What rate do I use for projects that cover more than one year?
If more than one year is involved in a project, the indirect cost rate used to recover indirect costs should change as the fiscal year changes. For instance, using an 18-month program starting August 1, 2012, the indirect cost rate approved for use in fiscal year 2012-13 would be used for expenditures incurred August 1, 2012, through June 30, 2013, and a new indirect cost rate approved for use in fiscal year 2011–12 would be used for expenditures incurred from July 1, 2012, until January 31, 2013.
For programs that follow the federal fiscal year, October 1 to September 30, the rates are still applied using the state fiscal year as the basis. For example, the approved rate for the initial fiscal year would be used for October 1 through June 30, and then the new approved rate would be used for the July 1 through September 30 time period.
Q: What if I have trouble receiving the Indirect Cost Rate Application emails or want to have another person in our office also receive the email?
Please contact your IT Department to make sure that the generic email address is working properly. BusMgr@[districtname].k12.or.usis the format for the ICR Application generic email address. For example, Super Fund School District’s ICR Application email will look like this: .
Q: What determines if indirect costs can be charged to a program?
In the absence of statutory or regulatory language that would prohibit claiming indirect costs (e.g., if the legislation is silent on the subject of indirect costs), then indirect costs can generally be charged. But, if the authorizing legislation says that funds must be spent solely on the item in question, then indirect costs cannot usually be claimed.
Q: Is there a cap or limit on the amount of indirect costs that can be charged?
An LEA may claim up to its approved indirect cost rate unless there is specific authority (legislation or regulation) to limit the rate.
Q: Does an LEA have to charge the entire amount of indirect costs allowed by its indirect cost rate?
An LEA may choose to claim less than the amount of indirect costs allowed by its indirect cost rate. Amounts not claimed under one award may not be shifted to another award, unless specifically authorized by legislation or regulation.
Q: What is the deadline for submitting my indirect cost rate certification?
An indirect cost rate certification for a specific fiscal year must be submitted by June 30th of the second subsequent fiscal year (see table below for certification due dates).
For Fiscal Year / Certification Due Date2010-2011 / 06/30/2012
2011-2012 / 06/30/2013
2012-2013 / 06/30/2014
2013-2014 / 06/30/2015
Q: Is an LEA required to charge indirect costs?
No, an LEA is not required to charge indirect costs and, therefore, will receive a “no rate” status. LEAswho wish to receive a “no rate” status will not be required to get onto the website; however, must send an email to ODE stating that they wish to receive a “no rate” status for the given fiscal year. ODE will retain this email in the LEA’s file for future reference.
Q: Can an LEA receive indirect funds without an approved indirect rate?
No, without an approved indirect from ODE, an LEA isunable to gain indirect funds with an indirect rate on any application for funds thru ODE.
Q: How long will it take to receive an approved indirect rate from ODE?
It depends. We (ODE) try to processes the certifications as quickly as possible; however, the turn-around time varies due to several reasons such as time of year, workload, and available staff. Once an LEA has certified their preliminary rate (after making any necessary adjustments), ODE will begin to review the data within five business days. ODE processes certifications in order in which they were received; however, priority is given to the current certification year. For example, FY 2012-13 certifications will receive priority over FY 2011-12 or FY 2010-11 certifications. If ODE receives several certifications on the same day, we’ll begin reviewing those certifications with the highest priority first.
Q: If an LEA received a “no rate” in the previous fiscal year, can receive an indirect rate for the current year?
Yes. An LEA may apply for an indirect rate regardless of whether or not the LEA chose a “no rate” or had an approved indirect rate.
Q: Will I use the Indirect Cost Rate Application for the entire certification process?
You will use the Indirect Cost Rate Application for most of the certification process; however, you will need to email or fax a copy of your district’s organizational chart since there is currently no ability to submit your organizational chart via the Indirect Cost Rate Application.
Q: Do I really have to submit a copy of our district’s organizational chart annually? What if there are no changes since last year?
Yes, if you are applying for an indirect rate, you must submit a copy of your district’s organizational chart each year even if there haven’t been any changes since the last submission. ODE will not finalize your indirect rate certification until we receive your organizational chart.