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Federal Indirect Cost Federal Indirect Cost Rate UpdateRate Update

Special Ed MOE ProcessSpecial Ed MOE Process

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Indirect Cost Rates 101Question:

Which program(s) represents your districts’ indirect cost pool for federal rates purposes?

a) 01b) 01 and 97c) 97d) 01, 21, 31, 45 and 97

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Indirect Cost Rates 101

Answer:

c) 97 – District-wide Support

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Federal Indirect Cost Rates

What’s changing When, Why and What’s changing When, Why and Where?Where?

What does this mean to districts?What does this mean to districts?

How will this change the calculation How will this change the calculation on the F-196?on the F-196?

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What’s Changing When, Why and Where?

What’s changing…More Exclusions (these are good!)

Food, Sub-grants, etc.

More Indirect Cost Pool Items (these are good!)Board of Directors

Audit, Legal costsSuperintendents Office

Public Relation costs

Space and Occupancy Costs (these are good!)For “organization-wide” activities

When – change is effective with FY 04-05 F-196 for FY 06-07 rates

Why – because we like you! (Renew 5 yr. agreement; & A-87, A-21, A-122)

Where – Instructions and guidance in ABFR & SD accounting manual

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What does this mean to districts?

Hopefully,

higher indirect cost rates for federal programs

- without -

a lot of extra effort!

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How will this change the calculation on the F-196?

The overall calculation will be very similar, however, the information reported will change somewhat…

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The Calculation(In Federal Terminology)

Restricted Indirect Cost Rate

equals

General Management Costs + Fixed Costs (Pool)(numerator)

divided by

Other Expenditures (Base)(denominator)

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Definitions and Terms

Due to non-supplant provisions… Restricted Indirect Cost Rate (includes fixed

with carry-forward adjustment = FWCF) Excluded Costs (Removed from Pool and

Base) General Management Costs (Pool) Fixed Costs (Pool) Other Expenditures (Base)

• Unallowable Costs (included in Base)

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F-196 Schedule for F-196 Schedule for Determining School District Determining School District Federal Restricted Indirect Federal Restricted Indirect Cost Rate Including FWCFCost Rate Including FWCF

(Handout) Part A Calculation

• (ID Exclusions, Base & Pool Costs)

plus Part B Calculation (FWCF)

equals District Restricted Indirect Cost Rate

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Schedule for Determining School District Federal Restricted Indirect Cost Rate Including Fixed With Carry-Forward Calculation for FY 2006-07

(Column 1) (Column 2) (Column 3) (Column 4) (Column 5) (Column 6) (Column 7)PART A ---------------------------------------------EXCLUDED--------------------------------------------- (Added to Direct (Pool) (Base)

TOTAL PROGRAM CAPITAL DEBT DISTORTING Expenditure Base) INDIRECT DIRECTProgram and Activity Titles EXPENDITURES OUTLAY SERVICE ITEMS UNALLOWABLE EXPENDITURES EXPENDITURES

Total Programs 01-89, 98, 99 C/NS 5321-97XXX C/NS 5091 - 97XX9 XXXX C/NS 9842X + 3301 XXXX XXXX C/NS col 1-2-3-4+5-6

Program 97 Activities11 Board of Directors 9711X 97119 XXXX 3311 C/NS col 1-2-3-4-6 3471 XXXX12 Superintendents Office 9712X 97129 XXXX 3321 C/NS col 1-2-3-4-6 3481 XXXX13 Business Office 9713X 97139 XXXX 3331 XXXX C/NS col 1-2-3-4 XXXX14 Human Resources 9714X 97149 XXXX 3341 XXXX C/NS col 1-2-3-4 XXXX25 Pupil Management and Safety 9725X 97259 XXXX 3351 C/NS col 1-2-3-4-6 XXXX XXXX61 Supervision 9761X 97619 XXXX 3361 C/NS col 1-2-3-4-6 3491 XXXX62 Grounds Maintenance 9762X 97629 XXXX 3371 C/NS col 1-2-3-4-6 3501 XXXX63 Operation of Buildings 9763X 97639 XXXX 3381 C/NS col 1-2-3-4-6 3511 XXXX64 Maintenance 9764X 97649 XXXX 3391 C/NS col 1-2-3-4-6 3521 XXXX65 Utilities 9765X 97659 XXXX 3401 C/NS col 1-2-3-4-6 3531 XXXX67 Building and Property Security 9767X 97679 XXXX 3411 C/NS col 1-2-3-4-6 3541 XXXX68 Insurance 9768X 97689 XXXX 3421 C/NS col 1-2-3-4-6 3551 XXXX72 Information Systems 9772X 97729 XXXX 3431 XXXX C/NS col 1-2-3-4 XXXX73 Printing 9773X 97739 XXXX 3441 XXXX C/NS col 1-2-3-4 XXXX74 Warehousing 9774X 97749 XXXX 3451 XXXX C/NS col 1-2-3-4 XXXX75 Motor Pool 9775X 97759 XXXX 3461 XXXX C/NS col 1-2-3-4 XXXX83 Interest 9783X 97839 97837 XXXX XXXX XXXX XXXX84 Principal 9784X 97849 97847 XXXX XXXX XXXX XXXX85 Debt-Related Expenditures 9785X 97859 97857 XXXX XXXX XXXX XXXX

Total Program 97 Districtwide Support 97XXX 97XX9

C/S 3561 (97837+97847+97857)

C/S 3571 (prog 97 Distorting Items)

C/S 3591 (total prog 97, Unallowable)

C/S 6081 (Total prog 97, Indirect

Expenditures)

XXXX

Sub-Total All Programs 5321 5091 3561C/S 3581 Total

Distorting ItemsXXXX

C/S 6101 (Total Indirect

Expenditures)C/S 6111 (Total Direct

Expenditures)

Unallowable Costs

XXXX XXXX XXXX XXXX C/NS (3591 displayed as a negative number)

XXXX3591

Totals 5321 5091 3561 3581C/NS (3591 + 3601 s/b

zero) 6101 C/S 6121 (6111 + 3591)

PART B

--- Fixed with carry-forward restricted indirect rate calculation1. Indirect rate used for FY 04-05 (from 2 year prior actuals FY 02-03) 6191 Index 12. Current Year Indirect Expenditures from Column 6 6101 (column 6)3. Current Year Direct Expenditures from Column 7 6121 (column 7)4. Indirect rate * Direct Expenditures (line 1 * line 3) line 1 * line 35. Net Indirect Expenditure pool adjusted amount (line 4 - line 2) line 4 - line 26. a) If line 5 is a positive number: 6a If line 5 is a positive #

1) Subtract from Indirect Expenditures (line 2 - line 5), or subtract from line 2 line 2 - line 5

b) If line 5 is a negative number: 6b If line 5 is a negative # -- or --

1) Change to a positive number, and change to positive #

2) Add to Indirect Expenditures (line 6b(1) + line 2) and add to line 2 line 5 + line 2c) Line 6a(1) or line 6b(2) is your adjusted Indirect Expenditure pool 6191 index 4 (6a1 or 6b2)

7. To arrive at the FY 06-07 indirect cost rate, Column 6a1 or 6b2 is divided by Column 7. 6191/6121

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Part A Calculation

Programs 01-89, 98 & 99 Program 97 by Activity

Column 1 - Total Program Expenditures

The system will display total expenditures for all programs and by activity for Program 97.

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Exclusions in Columns 2-4

Column 2 - Capital Outlay (Excluded)

The system will display total Object 9 Capital Outlay expenditures for all programs and by activity for Program 97.

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Column 3 - Debt Service (Excluded)

The system will display the total of Activities 83 thru 85 for Program 97.

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Column 4 - Distorting Items (Excluded)

1) For Programs 01-89, 98 and 99, enter amount for sub-grants (flow-thru) to other entities in item # 3301.

2) Program 98, Activity 42 (Food) will be combined with item # 3301 above.

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Column 4 - Distorting Items (Excluded) (cont.)

3) For Activities in Program 97, enter amounts for sub-grants, contingencies, election expenses, alterations, renovations, penalties and fines in item #’s 3311 to 3461.

4) Document!

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Column 6 - Indirect Expenditures (Pool) for Allowable Indirect Activities

An amount entered in this column will include costs of general administration “organization-wide” activities for:

Activity 11 Board of Directors1) Include audit costs and those legal costs not specifically related to the board of directors in item # 3471.2) Do not include Capital Outlay (Object 9) or other distorting items already reported in Columns 2 or 4.

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Activity 12 Superintendents Office

Include in item # 3481 costs for the following:1) Salary and benefit costs for any position of Superintendent, Deputy Superintendent, Assistant Superintendent, and their secretary which are allocable to indirect cost activities 13, 14, and 72 thru 75. These positions are required to maintain documentation supporting their allocation if they report time to indirect cost activities.

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Activity 12 Superintendents Office (cont.)

2) Any other expenditure directly related to the operation of the immediate offices for staff reported above. Expenditures directly related may include office supplies, travel, printing, warehousing, motor pool and information systems.

2020

Activity 12 Superintendents Office (cont.)

3) Include any Public Relation costs necessary to conduct general liaison or those specifically required by a federal award with news media and government public relations officers.

Do not include costs where the district’s sole purpose is to promote the governmental unit.

2121

Activity 12 Superintendents Office (cont.)

4) Costs not reported in 1, 2 or 3 above are unallowable and reported in Column 5.

5) Do not include Capital Outlay (Object 9) or other distorting items already reported in Columns 2 or 4.

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The system will calculate and display the total costs for “organization-wide Activities” 13, 14, and 72 thru 75

For Activities 61-68, include in item #’s 3491 to 3551 space and occupancy costs for Activities 12, 13 or 14 if a space allocation plan supports the charge.

Do not include Capital Outlay (Object 9) or other distorting items already reported in Columns 2 or 4 for the Activities above.

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Column 6, Activity 14 – (Optional)Termination Leave

Staff termination leave costs cannot be charged to a federal award, but may be considered an indirect expenditure and be coded to Program 97 (Activity 14).

(Annual program for Sick Leave buyback is ok to charge to federal award)

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Column 5 - Program 97 (Unallowable)

Activities 11, 12, 25 and 60 SeriesThe system will calculate and enter an amount for each of these Activities.

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Column 5 - Total Unallowable Costs

Costs in Program 97 (item # 3591) these costs which generate or benefit from the school districts indirect costs are added to item # 6111 Direct Expenditures (Base) in Column 7 to arrive at Total Direct Expenditures (item # 6121).

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To summarize Part A ……

Column 7 - Direct Expenditures (Base)

Direct expenditures (Column 7)equalstotal program expenditures (Column 1)lessexclusions (Columns 2-4) andindirect expenditures (Column 6)plusunallowable (Column 5)

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Part B - The FWCF Calculation

1. Indirect rate used for FY 04-05 (from 2 year prior actual FY 02-03)2. Current Year (FY 04-05) Indirect Expenditures from Column 63. Current Year (FY 04-05) Direct Expenditures from Column 74. Indirect rate * Direct Expenditures (line 1 * line 3)5. Net Indirect Expenditure pool adjusted amount (line 4 - line 2)

6. a) If line 5 is a positive number:

1) Subtract from Indirect Expenditures (line 2 - line 5), or

b) If line 5 is a negative number: 1) Change to a positive number, and 2) Add to Indirect Expenditures (line 6b(1) + line 2)(line 6a(1) or line 6b(2) is your new Indirect Expenditure pool)

7. Divide the new Indirect Expenditure pool by Direct Expenditures (column 6a/column 7)

8. The indirect cost rate calculated is used for FY 06-07

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The Calculation Example!-Sample District-

(Line 1) .053 (rate used in 04-05 from 02-03)

(Line 2) $1,107,165 (indirects for 04-05)(Line 3) $29,099,474 (directs for 04-05)(Line 4) $1,542,272 (line 1 * line 3)(Line 5) $435,107 (line 4 minus line 2)(Line 6a1) $672,058 (if positive=line 2-line

5)(Line 7) .023 (divide line 6a1 by line 3)

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Restricted Rate1. Indirect rate used for FY 04-05 from FY 02-03 F-196 0.053

2. Indirect Expenditures from Current Year F-196 (FY 04-05) 1,107,165.00

3. Direct Expenditures from Current Year F-196 (FY 04-05) 29,099,474.00

FIXED WITH CARRY FORWARD CALCULATION4. Indirect rate * Direct Expenditures (line 1 * line 3) 1,542,272.00

5. Net Indirect Expenditure pool adjusted amount (line 4 - line 2) 435,107.00

6. a) If line 5 is a positive number: 1) subtract from Indirect Expenditures (line 2 - line 5), OR 672,057.00 b) If line 5 is a negative number: 1) change to a positive number, and 2) add to Indirect Expenditures (line 6b(1) + line 2)(line 6a(1) OR line 6b(2) is your new Indirect Expenditure pool)

7. Divide the new Indirect Expenditure pool by the Direct Expenditures (line 6a(1)/line 3 or 0.023line 6b(2)/line 3).

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To summarize Part B ……

Column 7 - Restricted Indirect Cost Rate

equals

Indirect Expenditure Pool (Column 6a1)

divided by

Direct Expenditure Base (Column 7)

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SpEd Maintenance of Effort Update

Notices were sent on January 7, 2005 to 14 districts that failed 03-04 SY SpEd MOE tests.

11 of the districts have already had their exceptions approved.

The other 3 districts are working toward resolution or appeal.

It appears 2 or 3 may result in a recovery.

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03-04 Exceptions Requested & Allowed

The voluntary departure, by retirement or otherwise of special education or related services personnel, who are replaced by qualified lower-salaried staff.

Scenario: SLP with 15 years experience leaves district and is replaced with a first year SLP.

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03-04 Exceptions Requested & Allowed

Termination of an obligation of the school district to provide services for an exceptional high cost child.

Ex: Student moved from district.

Ex: District was able to provide a comparable IEP required program in-district as opposed to contracting with a neighboring district for $42,000 a year.

Exception allowed was the difference in cost of the two programs.

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03-04 Exceptions Requested & Allowed

District had modified its accounting for special education to the 1077 excess cost methodology.

This particular district was very slow in implementing the excess cost methodology but eventually they did!

(Perhaps at the coaxing of their friendly neighborhood auditor?)

3535

Exceptions not allowed

The voluntary departure, by retirement or otherwise, of special education or related services personnel who were not replaced.

The district must continue to provide IEPspecified services even if it is necessary to contract with an outside provider.

3636

Exceptions not allowed

Exception was not considered an obligation of the school district to provide services for an exceptional high cost student.

Reason: The services were not specified in the student’s IEP.

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04-05 Sp Ed MOE Template

The 0405 Sp Ed MOE Template can be found at http://www.k12.wa.us/safs/TT/SpEdMOE_PossibleSupplant%20Template.xls

Districts are encouraged to use this as a planning tool.

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