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2 What is ICRP? Indirect Cost Rate Proposal The documentation prepared by a governmental unit in accordance with OMB Circular A-87 to substantiate its request for the establishment of an indirect cost rate.

3 Why do we prepare ICRP? n Comply with the State’s Full Cost Recovery Policy to recover full costs whenever goods or services are provided for others. n Comply with Senate Bill 45 requiring all non-reimbursement Capital Outlay Support projects to include the functional indirect costs as part of project costs.

4 What are Full Costs? n DIRECT COSTS:  Identifiable with a specific cost objective. INDIRECT COSTS:  Not identifiable with a specific cost objective.  Not assignable to specific cost objective without disproportionate expense.

5 n Program Functional Rate n Administration Rate The Department utilizes Indirect Cost Rates to charge individual projects for their fair share of Indirect costs. How are indirect costs assessed to projects ?

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7 What is the Program Functional Rate? Total Indirect Cost = Functional Rate Direct Labor Examples of indirect costs: n Non-project Management & Supervision n Non-project Travel & Per Diem Non-project Training

8 PROGRAM FUNCTIONAL RATE Calculation: Indirect Cost Pool Program Functional INDIRECT LABOR & OE = Functional Rate Base 44.70% Capital Outlay Support Program Functional DIRECT LABOR (Rate effective from to ) Component: Indirect EAs n Off-the-Top EAs with Distribution to multiple programs

9 What is the Administration Rate? Total Indirect Cost = Administration Rate Direct Labor Examples: n Audits n Accounting Personnel

10 ADMINISTRATION RATE Component: n General Administration n Legal Services n Professional & Technical Services n Building & Equipment depreciation n Bond Interest Expense Central Service Costs (SWCAP & ProRata)

11 ADMINISTRATION RATE The Administration Rate is computed in two steps: Calculation: STEP #1 Total Administration costs are prorated to Department’s major programs. STEP #2 Prorated Administration Costs are divided by the program Direct Labor Indirect Cost Pool Administration LABOR & OE = Administration Rate Base 27.87% = Program 20.xx Program Functional DIRECT LABOR (Rate effective from to )

12 Both Rates Are Added Together For Billing e.g. Capital Outlay Support (rates effective from to business month) PROGRAM FUNCTIONAL RATE 44.70% ADMINISTRATION RATE % * Billing Rate 72.57%

13 How are indirect costs assessed to Reimbursed Projects? Indirect Cost Assessment on a Reimbursement project: Project Direct Labor cost =$ 3, Apply Payroll Reserve Rate = x 61.30% Loaded Labor ($3,500 plus 61.30%) = $ 5, Apply Indirect Cost Rate = x 72.57% Indirect Cost Assessment ($5, times 72.57%) = $4, Indirect cost assessment posted to project as O.E.costs: Project EA FS Program Object Indirect Cost Assessment $$$$$$ R $$$ 093 $4,096.94

14 How are indirect costs assessed to SB45 Projects? Indirect Cost Assessment on a SB45 project: Project Direct Labor cost =$ 3, Apply Payroll Reserve Rate = x 61.30% Loaded Labor ($3,500 plus 61.30%) = $ 5, Apply Indirect Cost Rate = x 44.70% Indirect Cost Assessment ($5, times 44.70%) = $2, Indirect Assessment posted to project as O.E.costs: Project EA FS Program Object Indirect Cost Assessment $$$$$$ T $$$ 193 $ 2,523.54

15 Who is impacted by ICRP? Resource Managers and Project Managers:  Projection and budget estimates  Planning and allocating resources  Project management.

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