1. Overview of Indirect Costs for State/Local Governmental Grantees
March 3rd, 2016
Victor M. Lopez, Division Chief, Division of Cost Determination
Debbie Galloway, Fiscal Policy Team Lead, Office of Grants Management

2. Polling Question: What is your role in your State or Local Government indirect cost process?
Statewide Cost Allocation Plan (SWCAP) – I am involved in the review, development or submission of the SWCAP issued by the office overseeing all agencies within my State.
Indirect cost proposal – I am involved in the development, review and/or reconciliation of my agency issued indirect cost rate (ICR) proposal or cost allocation plan (CAP).
Both – I am involved in the calculation and reporting of indirect costs from a SWCAP and my agency issued ICR proposals or CAP.
Ancillary – I am a State auditor or employee that may be involved in assisting or approving of an indirect cost rate for an agency.
None – I am not involved in the State or local governmental indirect cost process, I am hear to learn more about it.

3. Topics We Will Cover DCD’s website
Why does a State need to have a Federally approved indirect cost rate (ICR) or cost allocation plan (CAP)?
Which rules does a State/Local government follow for indirect costs?
What are the methodologies to charge indirect costs for State/Local government?
How often are indirect cost proposals due? Who approves them?
What is the difference between total, indirect, direct, and shared direct costs?
What is an ICR, common allocation bases, and examples of distribution bases for indirect costs?
What are the types of indirect cost rates? What should be included in proposals?
What is involved in the DCD negotiation process and sample rate agreement
Who approves indirect costs when receiving a Federal award as a subrecipient?
What are the requirements of the State in reviewing and approving indirect costs of its subrecipients such as local areas?

4. DCD’s Website (1 of 3)

5. DCD’s Website (2 of 3) #

6. DCD’s Website (3 of 3) #

7. Why does a state/local government needs to have a Federally approved ICR or CAP?
Compliance with Federal regulations and cost principles
Required in Federal Awards to support claimed indirect costs, when the organization receives more than one Federal grant/contract during a given FY.
Management information
Documentation for auditors
Close-out purposes

8. Which regulations must a state or local government follow for indirect cost proposals?
2 CFR Part 200, and Appendix V, for central service or public assistance cost allocation plans with FYs starting on or after December 26, 2014
2 CFR Part 200, and Appendix VII, for proposals with FYs starting on or after December 26, 2014
Example, a State with a FY starting July 1st would be required to submit a proposal in accordance with 2 CFR Part 200 on or after July 1, 2015.
OMB Circular A-87, for proposals with FYs starting prior to December 26, 2014.
Available web links in DCD’s website

9. Methodologies to charge Indirect Costs State/Local Governments
Indirect Cost Rate (ICR)*
Cost Allocation Plan (CAPs)
Allocates indirect costs to the grant(s) through an approved rate.
Allocation base examples: direct salaries & Wages, MTDCs, etc.
Typically adjusted on a yearly basis to account for actual costs incurred when using provisional/ final rates.
Rate agreement completes negotiation.
Allocates indirect costs the grant(s) through an approved cost allocation methodology.
Allocation base examples: direct hours paid, direct FTEs, etc.
Typically adjusted and charged to grants on a monthly basis based on actual costs.
CAP letter with supplemental schedule of allocated indirect costs completes negotiation.
Similarities between ICRs and CAPs:
Both methods achieve the same result when allocating indirect costs; require similar documentation for indirect cost proposal including: narratives explaining how all costs are allocated, financial schedules, and certifications of compliance with cost principles.
* Preferred method by Federal funding agencies.

10. 2 CFR Part 200, Appendix VII, Guidance on CAPs
Appendix VII to Part 200—States and Local Government and Indian Tribe Indirect Cost Proposals
A. General
3. Indirect costs are normally charged to Federal awards by the use of an indirect cost rate…
F. Other Policies
3. Indirect Cost Allocations Not Using Rates
In certain situations, governmental departments or agencies (components of the governmental unit), because of the nature of their Federal awards, may be required to develop a cost allocation plan that distributes indirect (and, in some cases, direct) costs to the specific funding sources. In these cases, a narrative cost allocation methodology should be developed, documented, maintained for audit, or submitted, as appropriate, to the cognizant agency for indirect costs for review, negotiation, and approval.
Note: In addition to narrative, DCD also requires cost schedules supporting the allocation of indirect costs.

11. How often are indirect cost proposals due? (1 of 3)
2 CFR Part 200, Appendix IV for nonprofit states:
b. Except as otherwise provided in § Indirect (F&A) costs paragraph (f) of this Part, a nonprofit organization which has not previously established an indirect cost rate with a Federal agency must submit its initial indirect cost proposal immediately after the organization is advised that a Federal award will be made and, in no event, later than three months after the effective date of the Federal award.
Note: DCD also uses the above guidance for state/ local governments, noting that 2 CFR Part 200, Appendix VII for state/locals is “silent” on that topic. This is consistent with grant documentation requirements in DOL to submit a proposal within 90 days of award.
Initial Proposal after receiving award!

12. How often are indirect cost proposals due? (2 of 3)
2 CFR Part 200, Appendix VII for state/locals, states:
D. Submission and Documentation of Proposals
1. Submission of Indirect Cost Rate Proposals
a. All departments or agencies of the governmental unit desiring to claim indirect costs under Federal awards must prepare an indirect cost rate proposal and related documentation to support those costs. The proposal and related documentation must be retained for audit…

13. How often are indirect cost proposals due? (3 of 3)
2 CFR Part 200, Appendix VII for state/locals, states:
D. Submission and Documentation of Proposals
1. Submission of Indirect Cost Rate Proposals
b. A governmental department or agency unit that receives more than $35 million in direct Federal funding must submit its indirect cost rate proposal to its cognizant agency for indirect costs.
Other governmental department or agency must develop an indirect cost proposal in accordance with the requirements of this Part and maintain the proposal and related supporting documentation for audit. These governmental departments or agencies are not required to submit their proposals unless they are specifically requested to do so by the cognizant agency for indirect costs. …
d. Indirect cost proposals must be developed (and, when required, submitted) within six months after the close of the governmental unit's fiscal year, unless an exception is approved by the cognizant agency for indirect costs….
Doesn’t qualify for 10% de minimis rate
Note: If DOL is the Federal cognizant agency, these state governmental agencies are required to submit all proposals to DCD.
Annual proposal based on actual costs!

14. Who approves indirect costs rates for direct Federal Awardees?
The Federal agency providing the largest dollar volume of direct funding is normally used to determine the cognizant Federal agency (responsible for negotiating/approving indirect costs). See DCD website for partial list of Federal cognizant agencies:
Education
DOL
HHS

15. Allowable Reasonable Allocable
To be chargeable to a Federal grant/contract, direct & indirect costs must be:
Allowable
Reasonable
Allocable
See: 2 CFR Part

16. Unallowable Costs
Specifically identified in the grant/contract as being unallowable, or identified in 2 CFR Part 200.
Examples of expressly unallowable indirect costs are:
Advertising and Public Relations
Bad Debts
Contributions
Entertainment Costs
Fundraising and Lobbying

17. What are total costs according to the Federal Cost Principles?
Total Costs = Direct Costs + Indirect Costs - Applicable Credits.
See: 2 CFR Part

18. Examples (program specific): Salaries – ETA program staff
What are Direct Costs?
Costs that are readily identified to a particular cost objective.
Examples (program specific):
Salaries – ETA program staff
Space – sq. ft. occupied by direct staff
Supplies – used by direct staff
Communications – used by direct staff
See: 2 CFR

19. What are examples of Direct Shared* Costs
Costs that benefit more than one program:
Salaries for a case manager who only works with adult, dislocated workers, and youth participants
Square footage of space occupied by the case manager
Communications devices, such as a cellphone used by the case manager
Supplies used by the case manager
* These are not to be confused with typical indirect costs such as Executive Direction, Accounting & Fiscal, HR, Payroll etc.

20. Direct vs. Indirect Costs
Consistency must be observed considering allowability of costs when allocating direct or indirect costs (2 CFR Part (c)).
The Cost Policy Statement (CPS) (which should be submitted with a proposal) must explain how the grantee treats all costs within the accounting system.

21. Indirect Costs/Direct Costs in an Organizational Chart
…………………………………………………
Indirect Salaries, Supplies
Space
Direct/Program
Salaries, Supplies, Space

22. What is an Indirect Cost Rate?
A ratio (whereby an indirect cost pool is divided by a direct cost base), which is then expressed as a percentage. Example:
Pool
Base
= Rate

23. What are common indirect cost rate allocation bases?
Direct salaries including or excluding fringe benefits
Total direct costs
Modified total direct costs - MTDC (various)
Example: total direct costs excluding capital expenditures, flow-through funding, participant support costs, and the first $25,000 of each subaward.

24. Examples of Allocations for Indirect Costs
ICR – Using Total Direct Salaries
ICR – Using Total Direct Costs
CAP – Using Total Direct Hours

28. Types of Indirect Cost Rates
Billing
Budgetary
Ceiling
De minimis
Final
Fixed (with carry forward)
Predetermined
Provisional
Hmmm?

29. Billing Rate
Rate stated in the award (subject to negotiation by grant/contract officer) to allow recovery of indirect costs until an indirect cost proposal is completed and submitted.
Valid for 90 days.

30. Budgetary Rate
Rate stated in the CAP approval letters issued by DCD, if requested by grantee. It is provided for planning purposes only, such as using it when applying for a grant.
Note: It should not be used for billing the grant on a monthly basis, as the organization would use the approved CAP methodology to do that.

31. Set by grant agreement, program statue or by Contract/Grant Officer.
Ceiling Rate
Set by grant agreement, program statue or by Contract/Grant Officer.
The maximum rate at which indirect costs may be recovered under a particular award

32. 10% De minimis Rate
Any non-Federal entity that has never received a negotiated indirect cost rate [with exceptions] … may elect to charge a de minimis rate of 10% of modified total direct costs (MTDC) which may be used indefinitely (§ (f)).
Subject to review/approval by grant officer.
Not a likely rate to be used considering many state/local governments have Federally approved rates and/or CAPs, and considering that is not applicable if getting over $35 million of Federal funds.

33. Set by the Federal cognizant agency.
Final Rate
Set by the Federal cognizant agency.
The experienced indirect cost rate based on actual data for the organization’s fiscal year
After issuance of final rates, adjustments for under/over collections of indirect costs should be reflected:
In the organizations’ accounting records,
In indirect costs billings to the Federal funding agencies (under collections of indirect costs are subject funds available)*
During the grant close-out process, or post-close-out.
See: 2 CFR Part 200, Appendix IV, C.1.

34. Set by the Federal cognizant agency (FCA).
Fixed Rate
Set by the Federal cognizant agency (FCA).
A permanent rate that is billed to the grant and is not subject to change. No close-out adjustments are needed.
Any differences between estimated and actual costs are carried forward as adjustments to rate computations in future periods and presented to the FCA in the indirect cost proposal for approval.
Typically approved for state/local organizations.
See: 2 CFR Part 200, Appendix IV, C.1.

35. Set by the Federal cognizant agency.
Predetermined Rate
Set by the Federal cognizant agency.
A rate negotiated for a certain length of time, usually several years
Not subject to change. No close-out adjustments are needed.
See: 2 CFR Part 200, Appendix IV, C.1.

36. Set by the Federal cognizant agency.
Provisional Rate
Set by the Federal cognizant agency.
A rate based on projected information, historical information, or a combination of the two for the organization’s fiscal year
This rate allows for recovery of indirect costs during the contract/grant period until the rate can be finalized.
All provisional indirect cost rates must eventually be adjusted to final rates.
See: 2 CFR Part 200, Appendix IV, C.1.

37. DCD Indirect Cost Negotiation Process
If you have a direct award with the federal government and DOL is the Federal Cognizant Agency, DCD:
Reviews the proposal for unallowable, unallocable and/or unreasonable costs
Reviews additional documentation if necessary
Performs trend analysis if needed
Advise of unallowable, unallocable or unreasonable items and negotiate these costs as appropriate.
Issues a rate agreement to formalize the negotiation results.
Proposals are typically reviewed within 120 days from receipt.

38. What should be included in the Indirect Cost Proposals; ICR or CAP?
Org. Chart, Timesheets/ Documentation supporting allocation of personnel expenses.
Cost Policy Statement – Describing all costs elements line item by line item and providing how these costs are allocated. Example, 100% indirect, indirect & direct, share direct, or 100% direct, etc.
Personnel Cost Worksheet, Allocation of Personnel Costs.
Statement of Fringes (if applicable).
Statement of Total Costs (including rate calculations, if applicable)
Certificate of Indirect Costs
Financial Statements
Listing of Federal Grants and Contracts showing source of Funding, grant/contract amounts, relevant dates.
See: ; for ICR or CAP checklists

39. What should be included in the Indirect Cost Proposals for State Workforce Agencies (SWAs)?
Similar documentation to the prior slide
Supplemental indirect cost schedules provided by accounting system
Documentation to support Statewide Cost Allocation Plan (SWCAP) charges approved by HHS (if proposed)
Documentation supporting CAPs related to ETA TEGL (SWAs that assess state taxes other than the UI tax)
Documentation supporting CAPs related to ETA TEGL (SWAs that use P&I for purposes other than UI)
See: ; for ICR or CAP checklists

40. HHS-Cost Allocation Services Office DOL-Division of Cost Determination
What are roles of HHS-Cost Allocation Services on indirect costs and DCD for state/local governments?
HHS-Cost Allocation Services Office
DOL-Division of Cost Determination
Act as FCA for grantees with predominance of direct Federal funds from HHS
SWCAP – Reviews, negotiate, and approves all state proposals. Allocated indirect costs are presented in the HHS SWCAP approved letters for States. A supplemental schedule is provided presenting allocated indirect costs at the departmental agency level.
Act as FCA for grantees with predominance of direct Federal funds from DOL
SWCAP – Reconciles the HHS approved SWCAP amount with amount in proposal submitted by state departmental agency. That proposal also typically includes: departmental/divisional indirect costs. All of those costs are included in the proposal and are reviewed and approved by DCD.
SWCAP – Defined as Statewide Cost Allocation Plan, approved by HHS for all states. Recovery of SWCAP costs are typically for central service type of costs, such as motor pools, computer centers, purchasing, accounting, etc., to operating agencies on a centralized basis.

41. Example of a Negotiated Indirect Cost Rate Agreement (NICRA)
STATE/LOCAL ORGANIZATION
ORGANIZATION: DATE: December 1, 200X
XYZ State/Local Agency,Inc FILE REF: This replaces the
Podunk, AL negotiation agreement dated October 12, 200X
The rates approved in this Agreement are for use on grants, contracts, and other agreements with the Federal Government. OMB Circular A-87 applies, subject to the conditions in Section II, A, below. The rates were negotiated by XYZ State/Local Agency and the U.S. Department of Labor in accordance with the authority contained in Attachment E, Section E.3., of the Circular.
Indirect rates for fiscal years that begin on or after 12/26/2014 are subject to 2 CFR Part 200, Subpart E, in accordance with the authority contained in 2 CFR, Part 200, Appendix VII, D.1.

42. Final 7/1/10 6/30/14 14.25% All All Programs
NICRA Rates…
Effective Period
Type
From To
Rate *
Location
Applicable to
Final 7/1/10 6/30/ % All All Programs
Final 7/1/11 6/30/ % All All Programs
Provisional 7/1/12 6/30/ % All All Programs
Provisional 7/1/13 6/30/ % All All Programs
(See Special Remarks)

43. NICRA – Cont…
BASE * :
Total direct salaries and wages including vacation, holiday and sick
pay but excluding all other fringe benefits.
TREATMENT OF FRINGE BENEFITS:
Fringe benefits are specifically identified to each employee and are
charged individually as direct costs. The directly claimed fringe
benefits are listed in the Special Remarks Section of this Agreement.
TREATMENT OF PAID ABSENCES:
Vacation, holiday, sick leave and other paid absences are included
in salaries and wages and are claimed on grants, contracts and
other agreements as part of the normal cost for salaries and wages.
Separate claims for these absences are not made.

44. NICRA – Cont…
A. LIMITATIONS: Use of the rate(s) contained in this Agreement
is subject to any statutory or administrative limitations and is applicable
to a given grant or contract only to the extent that funds are available.
Acceptance of the rate(s) agreed to herein is predicated upon the
following conditions:
(1) that no costs other than those incurred by the grantee/contractor
or allocated to the grantee/contractor via an approved central service cost
allocation plan were included in its indirect cost pool as finally accepted
and that such incurred costs are legal obligations of the grantee/contractor
and allowable under the governing cost principles,
(2) that the same costs that have been treated as indirect costs have
not been claimed as direct costs,
(3) that similar types of costs have been accorded consistent treatment, and
(4) that the information provided by the grantee/contractor which was used
as a basis for acceptance of the rate(s) agreed to herein is not subsequently
found to be materially inaccurate.
…Also, the rates cited in this Agreement are subject to audit.

45. NICRA – Cont…
B. CHANGES: The grantee/contractor is required to provide
written notification to the indirect cost negotiator prior to
implementing any changes which could affect the applicability
of the approved rates. Changes in the indirect cost recovery plan,
which may result from changes such as the method of accounting
or organizational structure, require the prior written approval of
the Division of Cost Determination (DCD). Failure to obtain such
approval may result in subsequent cost disallowance.
C. NOTIFICATION TO FEDERAL AGENCIES: A copy of
this document is to be provided by this organization to other Federal
funding sources as a means of notifying them of the Agreement
contained herein.

46. NICRA – Cont…
D. PROVISIONAL-FINAL RATES AND ADJUSTMENTS: When seeking initial reimbursement of indirect costs using the provisional/rate methodology, provisional rates must be in established within 90 days of receiving a Federal award (financial assistance, grants, cooperative agreements, and cost reimbursable contracts) requiring to account for actual costs incurred. The non-Federal entity or contractor must submit an indirect cost rate proposal within six (6) months after the end of their fiscal year to establish a final rate.
Once a final rate is negotiated, billings and charges to federal awards must be adjusted if the final rate varies from the provisional rate. If the final rate is greater than the provisional rate and there are no funds available to cover the additional indirect costs, the non-Federal entity or contractor may not recover all indirect costs. Conversely, if the final rate is less than the provisional rate, the non-Federal entity or contractor will be required to reimburse the funding agency for the excess billings. 

47. NICRA – Cont…
Non-Federal entities or contractors receiving a Federal cost reimbursable contract(s) - Must adhere with FAR (d)(2)(v), to settle final indirect cost rates typically on annual basis:
“The contractor shall update the billings on all contracts to reflect the final settled rates and update the schedule of cumulative direct and indirect costs claimed and billed, as required in paragraph (d)(2)(iii)(I) of this sections, within 60 days after settlement of final indirect cost rates.” 
In addition, the contractor shall provide to the Contracting Officer the noted cumulative costs schedule within 60 days of the execution of this agreement.
If the non-Federal entity or contractor has completed performance under any of the contracts covered by this Agreement, a final invoice or voucher must be submitted no later than 120 days from the date on which this Agreement is executed, following guidance from FAR (d)(5) and FAR (h). 

48. NICRA – Cont…
Non-Federal entities receiving Federal awards (financial assistance, grants, and cooperative agreements) – Note that even if Federal awards are administratively closed prior to the settlement of final indirect cost rates, non-Federal entities still must comply with the following 2 CFR Part 200 clauses stating, in part:
§    Post-closeout adjustments and continuing responsibilities
(a) The closeout of a Federal award does not affect any of the following:
(1) The right of the Federal awarding agency or pass-through entity to disallow costs and recover funds on the basis of a later audit or other review. The Federal awarding agency or pass-through entity must make any cost disallowance determination and notify the non-Federal entity within the record retention period.
(2) The obligation of the non-Federal entity to return any funds due as a result of later refunds, corrections, or other transactions including final indirect cost rate adjustments.
§    Collection of amounts due
(a) Any funds paid to the non-Federal entity in excess of the amount to which the non-Federal entity is finally determined to be entitled under the terms of the Federal award constitute a debt to the Federal Government.
(b) Except where otherwise provided by statutes or regulations, the Federal awarding agency will charge interest on an overdue debt in accordance with the Federal Claims Collection Standards (31 CFR parts 900 through 999). The date from which interest is computed is not extended by litigation or the filing of any form of appeal.

49. NICRA – Cont… E. SPECIAL REMARKS:
1. Indirect costs charged to Federal grants/contracts
by means other than the rate(s) cited in this Agreement should be
adjusted to the applicable rate cited herein and applied to the
appropriate base to identify the proper amount of indirect costs
allocable to the program.
2. Grants/contracts providing for ceilings as to the
indirect cost rates(s) or amount(s) which are indicated in
Section I above, will be subject to the ceilings stipulated in the
contract or grant agreements. The ceiling rate or the rate(s) cited
in this Agreement, whichever is lower, will be used to determine
the maximum allowable indirect cost on the grant or contract
agreement.

50. NICRA – Cont… ACCEPTANCE BY THE COGNIZANT AGENCY
BY THE ORGANIZATION: ON BEHALF OF THE FED GOV:
XYZ State/Local Agency, Inc U. S. Department of Labor
(Organization) (Agency) .
(Signature) (Signature)
Jane Doe Victor M. Lopez
(Name) (Name)
Executive Director Chief, Division of Cost Determination
(Title) (Title)
December xx, 20xx
(Date) (Date)
Negotiator:
Telephone No.: (202)693-41xx

51. Who approves Indirect costs when receiving a Federal award as subrecipient?
Appendix VII to Part 200—States and Local Government and Indian Tribe Indirect Cost Proposals States, in part: D. Submission and Documentation of Proposals 1. Submission of Indirect Cost Rate Proposals b. Where a non-Federal entity only receives funds as a subrecipient, the pass-through entity will be responsible for negotiating and/or monitoring the subrecipient's indirect costs.

52. 2 CFR Part §200.331 – Requirements for pass-through entities (1 of 2)
See 2 CFR Part § Requirements for pass-through entities (states, in part): All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification…

53. 2 CFR Part §200.331 – Requirements for
pass-through entities (2 of 2)
Includes many items of information including indirect costs elements listed below: (xiii) Indirect cost rate for the Federal award (including if the de minimis rate is charged per § Indirect (F&A) costs). (4) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government or, if no such rate exists, either a: - rate negotiated between the pass-through entity and the subrecipient (in compliance with this part), or - de minimis indirect cost rate as defined in § Indirect (F&A) costs, paragraph (f);

54. What are the requirements of the pass-through entity (prime recipient) in reviewing and approving indirect costs of its subrecipients?
Require an indirect cost proposal from each subrecipient, every year (six months after the end of the FY), for the life of the Federal award. This is applicable to negotiation of Provisional/Final, Fixed with Carry forward rates, or predetermined rate.
Note - Predetermined rates for a number of years, or de minimis rate (if applicable), could also be negotiated.
DCD published web guidelines could be followed for indirect cost proposal preparation.
Evaluate costs proposed in terms of allowability, allocability, and reasonableness,
Negotiate and issue a rate agreement for the applicable FY.
Keep documentation on file.

55. Who Approves Indirect Costs and at what Level? Direct Federal Funding
NICRA by FCA
NICRA
by FCA
NICRA by FCA
Pass-through Entity # 1
Pass-through Entity # 2
Pass-through Entity # 3
KEY NICRA – Approved negotiated indirect costs rate agreement
FCA – Federal cognizant agency

56. Federal Funding received through PTEs
Pass-through Entity # 1
Pass-through Entity # 2
Pass-through Entity # 3
PTE #2 should establish a new NICRA with sub. or
May accept NICRA approved by PTE #1 or PTE #3 *
PTE #3 should establish a new NICRA with subrecipient or
PTE #1 should establish a new NICRA with sub. or
May accept NICRA approved by PTE #2 or PTE #3 *
May accept NICRA approved by PTE #1 or #2*
Subrecipient
* Proposals must be based on provisional/final rate methodology.
All pass-through costs from PTEs to the subrecipient must be included in the subrecipient’s allocation base to recalculate rate(s) for applicable FYs.
KEY NICRA – Approved negotiated indirect costs rate agreement
FCA – Federal cognizant agency
PTE – Pass-through entity

57. Who Approves Indirect Costs and at what Level? Direct Federal Funding
Subrecipient
Note - If at some point the subrecipient receives direct Federal funding, then a new NICRA would need to be approved by the FCA, which would be applicable to all funding received from PTEs.
Current NICRAs between subrecipient & PTEs would no longer be applicable after expiration.

58. Questions?

59. Recent Q&As
What if I have a SWCAP do I have to get an ICR now? Response: Either an ICR or SWCAP needs to be approved so that the state agency properly support the recovery of a share of SWCAP costs, as well as indirect costs incurred at the departmental/divisional levels.
The budgetary rate is contained in the CAP approval letter, can it be used to apply for a predetermined or fixed rate? I am not sure if I have the lingo/terms identified correctly. Also what is a ‘budgetary rate’? Response – Possibly, but it would change how indirect costs are allocated using the state’s accounting system. Contact your cost negotiator for more details. Definition of budgetary rate is on Slide 30. A budgetary rate is only for planning purposes and can NOT be used for billing.
If a subrecipient receives pass through funds from a state and has a direct federal award, if it has never obtain an approved indirect cost rate, can the state negotiate the rate or does the subrecipient have to negotiate with the Federal agency? Response – The subrecipient would need to negotiate with their Federal cognizant agency. The Federally approved rate agreement could also be applied to state funding.
Is an agency who has more than one grant required to have an indirect cost rate? Response: No, The Uniform Guidance does not mandate an indirect cost rate for every grant. However, if a grant recipient or subrecipient intends to claim and charge indirect costs and receives funding from multiple sources, an indirect cost rate is needed to ensure that each grant receives its share of allowable, allocable, and reasonable indirect costs.

60. Recent Q&As
A local unit of government receives Title I WIA funds and one direct federal grant from DOL. If the local unit of government has an approved cost allocation plan, which includes the costs of accounting, the CEO salary, and other overheard (indirect costs) costs. Does the local unit of government need to apply for an indirect cost rate? Response – If they have a Federally approved CAP, they don’t need to apply for a rate.
We are a sub-recipient. The State is the direct recipient of WIOA funds. The State is requiring use to accept the de minimis rate and they won’t negotiate a rate with me. Response – Per 2 CFR Part , the State must approve a de minimis rate or negotiate a rate with the subrecipient if the subrecipient does not have a Federally approved rate.
The Federally approved indirect cost rate expired on direct grant but still receive Federal funds from the State. Would the sub-recipient negotiate a rate with the Federal agency or the state agency, or can it request the de minimis rate? Response: The state would need to negotiate a rate with the subrecipient. The de minimis rate is not an available option since it had a Federally approved indirect cost rate in the past.

61. Recap
DCD’s website
Why does a State need to have a Federally approved indirect cost rate (ICR) or cost allocation plan (CAP)?
Which rules does a State/Local government follow for indirect costs?
What are the methodologies to charge indirect costs for State/Local government?
How often are indirect cost proposals due? Who approves them?
What is the difference between total, indirect, direct, and shared direct costs?
What is an ICR, common allocation bases, and examples of distribution bases for indirect costs?
What are the types of indirect cost rates? What should be included in proposals?
What is involved in the DCD negotiation process and sample rate agreement
Who approves indirect costs when receiving a Federal award as a subrecipient?
What are the requirements of the State in reviewing and approving indirect costs of its subrecipients such as local areas?

62. THANK YOU! #