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Indirect Cost Rates

Indirect Cost Rates. Phil Boone: MDE - Office of State Aid & School Finance. What is an Indirect Cost Rate?. A ratio representing the proportion of district expenditures used for “overhead” as opposed to direct costs of programs. How is an indirect cost rate used?.

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Indirect Cost Rates

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  1. Indirect Cost Rates Phil Boone: MDE - Office of State Aid & School Finance

  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.

  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

  4. Types of Rates • Special Education • Restricted • Unrestricted • Medicaid

  5. Special Education Rate • Report RO416 • ISD rate is weighted average • Based on FID data • No district input needed • Published in April for current year • Capped at 15%

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

  7. Unrestricted Rate • Applicable to federal School Lunch grants • Includes ops/maint, CEO costs • Capped at 15%

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

  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

  10. RO418A

  11. RO418

  12. What should the district do? First Step: Reconcile the R0418 to your expenditure trial balance/FID submission. Note: R0418 Total Expense column does not include any function codes 49x and later Or to look at it another way: R0418 Total Expense column only includes function codes 1xx through 45x

  13. Cost adjustments • Spreadsheet form DS-4513 • Exclusions on 1st page • Re-classifications on 2nd page • Limited window • Due June 1

  14. Automatic Exclusions R0418A automatically excludes all costs from the following funds: Debt Service Funds Capital Project Funds Internal Service Funds Other Funds (District Wide Reporting, Capital Assets, and Long Term Liability Funds)

  15. Automatic Exclusions MDE will have already identified these exclusions: • Capital Outlay (6xxx) • Cost of food (56xx) • Interest (72xx) • Claims and Judgments (75xx) • Taxes Abated and Written Off (76xx)

  16. Requesting additional exclusions • Amount of contracted service in excess of $25,000. • See $25,000 rule document on MDE website • Fines and penalties • Interest expenses

  17. DS-4513 exclusions

  18. Automatic Reclassifications • State codes 2XX-8XX • Indicates grant funded activity • If indirect, must reclassify as direct cost

  19. Requesting additional reclassifications • Legal and Audit expenditures • CEO costs • Any grant funded indirect costs not identified by State code

  20. DS-4513 reclassifications

  21. Final RO418 • Costs adjusted by DS-4513 • Posted to web • Alert to district via monthly State School Aid UPDATE

  22. Final RO418

  23. Questions? • boonep2@michigan.gov • 517-335-4059

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