6110.01 - ALLOWABLE INDIRECT COST CALCULATION

Jennings County School Corporation

Bylaws & Policies

6110.01 - ALLOWABLE INDIRECT COST CALCULATION

The Board recognizes the financial necessity to assess indirect cost when allowable for programs that are supported in full or in part by State and Federal programs or grants.

Definition of Indirect Costs

An "indirect cost (IDC)" is incurred for a common or joint purpose benefiting more than one cost objective, but not readily assignable to specific programs benefited. The IDCs are pooled and charged by allocation to various programs.

An "indirect cost rate" is a percentage approved for recovery from State or Federal programs. The rate for a public school district is approved annually by the Indiana Department of Education.

An "indirect cost recovery" is an amount charged to a Federal grant based on application of an approved IDC rate. The IDC recoveries are "drawn" from a grant award as expenditures are incurred. The amount of the grant award is not affected by IDC recoveries, but the amount of the award available for direct costs of the project is smaller if IDCs are drawn from the award.

Spending Indirect Cost Recoveries

The IDC recoveries are to be used for general administrative expenses and should not be accumulated beyond the end of the fiscal year unless a spending plan has been approved by the Board.

Limits on the Recovery of Indirect Costs

There are five (5) major limitations that affect the amount of indirect costs that may be recovered. The limitations are:

	A.	Approved rate or lower than allowed: The rate used is the maximum allowed by the Indiana Department of Education or the Federal Grant/Program.

	B.	Availability of funds: Recovery of indirect costs is subject to the availability of funds. The total direct and indirect costs cannot exceed the maximum funds available.

	C.	Direct costs incurred: Indirect costs are recovered to only the extent of direct costs incurred. The indirect cost rate is applied to the direct cost amount expended less capital outlay and transfers to other entities, not the total grant or program amount.

	D.	Period for which rates are applicable: An indirect cost rate certification approved by the Indiana Department of Education is applied for one (1) year. The rate is valid for the fiscal year for which the term or grant applies. To recover indirect costs, the LEA applies the indirect cost rate in effect for the given applicable fiscal year or term less capital outlay during that fiscal year or term.

Adopted 5/9/11