Indirect Cost Rates 1 A Brief Introduction Indirect

Indirect Cost Rates 1

A Brief Introduction • Indirect Cost Rates are intended to defray the costs associated with implementation of grant programs housed within districts. • Indirect Cost Rates Do NOT increase your grant amount. • You do not have to apply for or apply IDC’s to grants received. 2

How the presentation is split up Title Current calculation of IDC rate from Exp Change to calculation of IDC rate from Exp New carry forward calculation Additional Changes with the new agreement Reclassification of costs References Slide # 4 -10 11 -12 16 -18 19 -20 21 -24 25 3

Current calculation of IDC rate from Exp 4

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Funds <50 and Object not in (‘ 910’, ’ 971’) 6

Funds <50 and Object not in (‘ 910’, ’ 971’) Direct Step 1: Fund <50 Function Not In ('25 XX', '28 XX', '4 XXX', '52 XX', '62 XX') Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X' , '971', '910') Step 2: Fund<50, Function 62 XX, Object 940 Step 3: Funds NOT in ('01', '14', '25', '26', '28', '29') And <"50", "25 XX"Function, Object Not in ('7 XX', '710', '715', '720', '725', '73 X', '74 X', '971', '910') All summed then minus Indirect Step 2 and Indirect Step 3 7

Funds <50 and Object not in (‘ 910’, ’ 971’) Indirect Step 1: Funds In ('01', '14', '25', '26', '28', '29'), Function "25 XX", Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X', ’ 971’, ’ 910’) Direct Step 1: Fund <50 Function Not In ('25 XX', '28 XX', '4 XXX', '52 XX', '62 XX') Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X' , '971', '910') Step 2: Fund "15", Program Like "1**" Or "271", Function "25 xx", Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X') Step 3: Fund "21", In Objects ('1 XX', '2 XX‘) (Section VII green guide pg 33 A 2) Step 2: Fund<50, Function 62 XX, Object 940 Step 3: Funds NOT in ('01', '14', '25', '26', '28', '29') And <"50", "25 XX"Function, Object Not in ('7 XX', '710', '715', '720', '725', '73 X', '74 X', '971', '910') All summed then minus Indirect Step 2 and Indirect Step 3 8

Funds <50 and Object not in (‘ 910’, ’ 971’) Indirect Step 1: Funds In ('01', '14', '25', '26', '28', '29'), Function "25 XX", Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X', ’ 971’, ’ 910’) Direct Step 1: Fund <50 Function Not In ('25 XX', '28 XX', '4 XXX', '52 XX', '62 XX') Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X' , '971', '910') Step 2: Fund "15", Program Like "1**" Or "271", Function "25 xx", Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X') Step 3: Fund "21", In Objects ('1 XX', '2 XX) (Section VII green guide pg 33 A 2) Step 2: Fund<50, Function 62 XX, Object 940 Cap Outlay Step 3: Funds NOT in ('01', '14', '25', '26', '28', '29') And <"50", "25 XX"Function, Object Not in ('7 XX', '710', '715', '720', '725', '73 X', '74 X', '971', '910') Step 1: Funds <50, Objects In ('7 XX', '710', '715', '720', '725', '73 X', '74 X') All summed then minus Indirect Step 2 and Indirect Step 3: Funds <50, Function 4 XXX, Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X') Step 2: Funds <50 Function 62 XX, Object <>940 9

Funds <50 and Object not in (‘ 910’, ’ 971’) Indirect Step 1: Funds In ('01', '14', '25', '26', '28', '29'), Function "25 XX", Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X', ’ 971’, ’ 910’) Direct Step 1: Fund <50 Function Not In ('25 XX', '28 XX', '4 XXX', '52 XX', '62 XX') Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X' , '971', '910') Step 2: Fund "15", Program Like "1**" Or "271", Function "25 xx", Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X') Step 3: Fund "21", In Objects ('1 XX', '2 XX) (Section VII green guide pg 33 A 2) Step 2: Fund<50, Function 62 XX, Object 940 Cap Outlay Step 3: Funds NOT in ('01', '14', '25', '26', '28', '29') And <"50", "25 XX"Function, Object Not in ('7 XX', '710', '715', '720', '725', '73 X', '74 X', '971', '910') Step 1: Funds <50, Objects In ('7 XX', '710', '715', '720', '725', '73 X', '74 X') All summed then minus Indirect Step 2 and Indirect Step 3: Funds <50, Function 4 XXX, Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X') Step 2: Funds <50 Function 62 XX, Object <>940 Debt Fund <50, Function '52 XX' 10

Funds <50 and New Method beginning for FY 14 & FY 18 Object not in (‘ 910’, ’ 971’) Food/ Other Indirect Step 1: Funds In ('01', '14', '25', '26', '28', '29'), Function "25 XX", Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X', ’ 971’, ’ 910’) Direct Step 1: Fund <50 Function Not In ('25 XX', '28 XX', '4 XXX', '52 XX', '62 XX') Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X', '971', '910') Step 2: Fund "15", Program Like "1**" Or "271", Function "25 xx", Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X') Step 3: Fund "21", In Objects ('1 XX', '2 XX) (Section VII green guide pg 33 A 2) Step 2: Fund<50, Function 62 XX, Object 940 Cap Outlay Step 3: Funds NOT in ('01', '14', '25', '26', '28', '29') And <"50", "25 XX"Function, Object Not in ('7 XX', '710', '715', '720', '725', '73 X', '74 X', '971', '910') Step 1: Funds <50, Objects In ('7 XX', '710', '715', '720', '725', '73 X', '74 X') Step 4: Function Not in (‘ 31 XX‘ AND Not Object '1 XX', '2 XX') Fund <50, Function '31 XX' all Objects Not '1 XX', '2 XX') Step 2: Funds <50 Function 62 XX, Object <>940 Step 3: Funds <50, Function 4 XXX, Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X') All summed then minus Indirect Step 2 Debt Fund <50, Function '52 XX' 11

Funds General and Special Revenue funds Excludes Operating and Residual Equity Transfers Direct Funds General and Special Revenue funds (Step 1) All Functions but not: 25 XX Support Services - Business 28 XX Reserved (Historical) 4 XXX Facilities Acquisition and Construction Services) 52 XX Capital Leases or Long Tern Notes with Board of Investments 62 XX Resource Transfers All Object but not: Indirect (Step 1) Funds In 01 General Fund 14 Retirement Fund 26 Impact Aid Fund 28 Technology Fund And all funds less than fund 50 and in…… 7 XX Capital Outlay 725 Major Const 710 Cap Out Land 73 X Major Equipt New 24 Metal Mines Fund 25 State Mining Impact 29 Flexibility Fund 25 XX Support Services - Business and, Object Not in 715 Cap Out Land Improve 74 X Major Equipt Replace 720 Cap Out Purch Building 971 Residual Transfers 910 Operating Transfers 7 XX Capital Outlay 710 Cap Out Land 715 Cap Out Land Improve 720 Cap Out Purchase Existing Building 725 Major Construction 73 X Major Equipment New 74 X Major Equipment Replacement (Step 2) Fund 15 Misc Program Fund in Programs Like 1** All Regular Programs Or 271 Indirect Costs, and Function 25 XX Support Services - Business, Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X') see above (Step 2) Funds General and Special Revenue funds in : Cap Outlay 62 XX Resource Transfers and 940 Indirect Costs (Step 1) Funds General and Special Revenue funds Objects In 7 XX Capital Outlay 710 Cap Out Land 715 Cap Out Land Improve 720 Cap Out Purchase Existing Building 725 Major Construction 73 X Major Equipment New 74 X Major Equipment Replacement (Step 3) All Funds but not: 01 General Fund 14 Retirement Fund 24 Metal Mines Fund 25 State Mining Impact Fund 26 Impact Aid Fund 28 Technology Fund 29 Flexibility Fund And all funds less than fund 50 and in…… 25 XX Support Services - Business and, Object Not in 971 Residual Transfers 910 Operating Transfers 7 XX Capital Outlay 710 Cap Out Land 715 Cap Out Land Improve 720 Cap Out Purchase Existing Building 725 Major Construction 73 X Major Equipment New 74 X Major Equipment Replacement All summed then minus Indirect Step 2 (Step 3) Fund 21 Comp Absences, In Objects 1 XX Salary, 2 XX Benefits (Section VII green guide pg 33 A 2) (Step 2) 62 XX Resource Transfers but not in 940 Indirect Costs (Step 3) 4 XXX Facilities Acquisition and Construction Services) But Object Not In : 7 XX Capital Outlay 710 Cap Out Land 715 Cap Out Land Improve 720 Cap Out Purchase Existing Building 725 Major Construction 73 X Major Equipment New 74 X Major Equipment Replacement Debt Funds General and Special Revenue funds 52 XX Capital Leases or Long Tern Notes with Board of Investments 12

Funds General and Special Revenue funds Excludes Operating and Residual Equity Transfers New Method beginning for FY 14 & FY 18 Direct Food/ Funds General and Special Revenue funds (Step 1) All Functions but not: 25 XX Support Services - Business 28 XX Reserved (Historical) 4 XXX Facilities Acquisition and Construction Services) 52 XX Capital Leases or Long Tern Notes with Board of Investments 62 XX Resource Transfers All Object but not: 971 Residual Transfers 910 Operating Transfers 7 XX Capital Outlay 710 Cap Out Land 715 Cap Out Land Improve 720 Cap Out Purchase Existing Building 725 Major Construction 73 X Major Equipment New 74 X Major Equipment Replacement (Step 2) Funds General and Special Revenue funds in : Indirect (Step 1) Funds In 01 General Fund 14 Retirement Fund 26 Impact Aid Fund 28 Technology Fund And all funds less than fund 50 and in…… 7 XX Capital Outlay 725 Major Const 710 Cap Out Land 73 X Major Equipt New 24 Metal Mines Fund 25 State Mining Impact 29 Flexibility Fund 25 XX Support Services - Business and, Object Not in 715 Cap Out Land Improve 74 X Major Equipt Replace 720 Cap Out Purch Building (Step 2) Fund 15 Misc Program Fund in Programs Like 1** All Regular Programs Or 271 Indirect Costs, and Function 25 XX Support Services - Business, Object Not In ('7 XX', '710', '715', '720', '725', '73 X', '74 X') see above (Step 3) Fund 21 Comp Absences, In Objects 1 XX Salary, 2 XX Benefits (Section VII green guide pg 33 A 2) Due to Montana approving Restricted rates only. 62 XX Resource Transfers and 940 Indirect Costs Cap Outlay Other (Step 3) All Funds but not: 01 General Fund 14 Retirement Fund 24 Metal Mines Fund 25 State Mining Impact Fund 26 Impact Aid Fund 28 Technology Fund 29 Flexibility Fund And all funds less than fund 50 and in…… (Step 1) Funds General and Special Revenue funds Objects In 7 XX Capital Outlay 710 Cap Out Land 715 Cap Out Land Improve 720 Cap Out Purchase Existing Building 725 Major Construction 73 X Major Equipment New 74 X Major Equipment Replacement Funds General and Special Revenue funds 25 XX Support Services - Business and, Object Not in 971 Residual Transfers 910 Operating Transfers 7 XX Capital Outlay 710 Cap Out Land 715 Cap Out Land Improve 720 Cap Out Purchase Existing Building 725 Major Construction 73 X Major Equipment New 74 X Major Equipment Replacement (Step 4) Function 31 XX School Foods Objects 1 XX Salary & 2 XX Benefits are included all other Function 31 XX & Objects are excluded. All summed then minus Indirect Step 2 31 XX School Foods not Objects 1 XX Salary 2 XX Benefits (Step 2) 62 XX Resource Transfers but not in 940 Indirect Costs (Step 3) 4 XXX Facilities Acquisition and Construction Services) But Object Not In : 7 XX Capital Outlay 710 Cap Out Land 715 Cap Out Land Improve 720 Cap Out Purchase Existing Building 725 Major Construction 73 X Major Equipment New 74 X Major Equipment Replacement Debt Funds General and Special Revenue funds 52 XX Capital Leases or Long Tern Notes with Board of Investments 13

New Schedule A and Carry Forward Calculation 14

LE 0098 Great Falls EL Schedule A for 07 Cascade SS 0278 Great Fall Public Schools 1 XXX 21 XX 221 X 222 X 23 XX 24 XX 25 XX 26 XX 27 XX 31 XX 33 XX 35 XX 62 XX Totals Instruction Support Services Students Improvement of Instruction Services Educational Media Services Support Services General Administration Support Services School Administration Support Services Business Operation and Maintenance of Plant Services Student Transportation Services Food Services Community Services Extracurricular Athletics Resources Transferred to Other School District or Cooperatives 1 XXX 21 XX 221 X 222 X 23 XX 24 XX 25 XX 26 XX 27 XX 33 XX 34 XX 35 XX 4 XXX Instruction Support Services Students Improvement of Instruction Services Educational Media Services Support Services General Administration Support Services School Administration Support Services Business Operation and Maintenance of Plant Services Student Transportation Services Food Services Community Services Extracurricular Athletics Facilities Acquisition and Construction Services LE 0099 Great Falls HS Total Exp Direct Indirect Cap Outlay Debt 25, 076, 819. 69 25, 019, 389. 87 7, 419. 80 50, 010. 02 1, 977, 799. 59 1, 908, 389. 00 69, 410. 59 0 1, 137, 760. 20 1, 135, 733. 80 0 2, 026. 40 414, 624. 99 0 0 370, 127. 41 0 0 2, 054, 429. 19 0 0 1, 213, 361. 89 0 1, 126, 420. 89 86, 941. 00 4, 783, 228. 32 0 0 728, 478. 04 0 0 91, 332. 87 0 0 259, 488. 44 0 0 764, 159. 55 0 0 10, 535. 90 62 XX Resources Transferred to Other School District or Cooperatives Totals LE 0098 Great Falls EL LE 0099 Great Falls HS Total Exp Direct Indirect Cap Outlay Debt Other 30, 625, 326. 90 30, 568, 374. 92 29, 312. 73 27, 639. 25 0 0 3, 043, 828. 54 2, 954, 147. 59 89, 680. 95 0 0 0 784, 781. 29 780, 847. 69 0 3, 933. 60 0 0 1, 281, 906. 37 0 0 850, 572. 87 0 0 2, 748, 267. 61 0 0 1, 781, 110. 34 0 1, 762, 370. 11 18, 740. 23 0 0 6, 259, 443. 63 6, 253, 440. 63 0 6, 003. 00 0 0 1, 751, 611. 17 0 0 3, 010, 173. 53 3, 003, 373. 53 0 6, 800. 00 0 0 28, 018. 36 0 0 437, 055. 76 0 0 2, 062. 68 0 0 52, 604, 159. 05 50, 659, 679. 18 1, 881, 363. 79 63, 116. 08 0. 00 Indirect/Direct 860, 657. 38 39, 742, 803. 46 Preliminary Rate 3. 71% 3. 13% 860, 657. 38 0 38, 390, 038. 86 1, 203, 251. 28 0 149, 513. 32 0 0 0 0. 00 Other 0 0 0 0. 00 Adjusted Rate 15

New Carry Forward Method Line B Preliminary Indirect Cost Rate These are the rates generated from what was reported in the Trustee Financial Summaries (TFS) submitted annually to Montana OPI. This would be using the same methodology as what is currently on the Schedule A Year, in this section is referring to the year the indirect cost rate will be applied for. Recall that TFS data will be two years prior. SS SS Name LE Le. Name 2008 2009 2010 2011 0278 Great Falls Public Schls 0098 Great Falls Elem 0. 0439 0. 0268 0. 0216 0. 0346 0278 Great Falls Public Schls 0099 Great Falls H S 0. 0289 0. 0444 0. 0335 0. 0304 Line C Approved Indirect Cost Rate These are the rates after reclassification has occurred. LE's will still have the option to reclassify costs from Direct to Indirect, with approval and supporting documentation. Although this is currently titled Approved Indirect Cost Rates the title will need to change to something other than this, perhaps Adjusted Rate After Reclassification. Year in this section is referring to the year the indirect cost rate will be applied for. Recall that TFS data will be two years prior. SS SS Name LE Le. Name 2008 2009 2010 2011 0278 Great Falls Public Schls 0098 Great Falls Elem 0. 0592 0. 0107 0. 0081 0. 0801 0278 Great Falls Public Schls 0099 Great Falls H S 0. 0378 0. 0777 0. 051 0. 0009 16

New Carry Forward Method Pg. 2 Line D Higher of Preliminary or Approved Indirect Cost Rate This section selects the higher value between the Preliminary and the Approved Rate. This will become the rate that is five year averaged. SS SS Name LE Le. Name 2008 2009 2010 2011 0278 Great Falls Public Schls 0098 Great Falls Elem 0. 0592 0. 0268 0. 0216 0. 0801 0278 Great Falls Public Schls 0099 Great Falls H S 0. 0378 0. 0777 0. 0510 0. 0304 Line E Five Year Average with 5% Discount This section averages five years of data from the section titled (Higher of Preliminary or Approved Indirect Cost Rate) As an Example: Great Falls Elem LE 0098 2007 the formula is =Average(0. 0592+0. 0268+0. 0216+0. 0801+0. 0371)*. 95 SS SS Name LE Le. Name 2012 0278 Great Falls Public Schls 0098 Great Falls Elem 4. 27% 0278 Great Falls Public Schls 0099 Great Falls H S 4. 34% 17

New Carry Forward Method Pg. 3 Line F Average of LE's contained under one School System Code (SS) The values from the section above are averaged together by SS These are the final Approved Indirect Cost Rates for the years listed and would be considered for approval. The final value has been rounded to 4 places SS SS Name 0278 Great Falls Public Schls 2012 ROUND(AVERAGE(J 74: J 75), 4) 4. 30% Preliminary Final Rates for Approval Adjusted Final Rate for Approval 18

New changes associated with Delegation Agreement dated 2/3/2017 19

Delegation Agreement dated 2/3/2017 Expenditures for school districts that exceed 2, 600 enrolled students must reclassify expenditures associated with the business manager to the base for approval of an indirect cost rate. 2600 enrolled students on the fall enrollment count of the year of the TFS expenditures being used for determining the IDC rate. The count is by School System. Reported expenditures to OPI include some business manager expenditures coded to function 25 XX. OPI calculates these expenditures as Indirect Costs when determining calculated rates. When the district applies for a new IDC rate the requestor needs to redirect these costs to Direct and Unallowable Costs (Base). Ex. 700 business to function 25 XX. Ex. 700 included in indirect. Indirect 5, 000 - 700 Direct 13, 000+700 Indirect Direct = 4, 300 13, 700 5, 000 13, 000 20

Reclassification of Costs 21

What can be Reclassified as Indirect costs as those that are incurred for a common or joint purpose benefiting more than one cost objective. In addition, indirect costs cannot be readily identified as benefiting a particular cost objective. Examples of indirect costs include the salaries and expenses for the following: Data Processing Accounting Personnel Purchasing Indirect costs are normally charged to federal programs through the indirect cost rate. Grantees must be consistent in treating costs as direct or indirect under federal awards. Once a cost is treated as direct or indirect, it should be treated that way for all projects and activities, regardless of the source of funding. 22

What can be Reclassified as Indirect Salaries and Expenditures for: Accounting, Budgeting, Payroll, Personnel management, Purchasing, Labor negotiation contracts, Mailrooms, Computer networks, or data processing operations are examples of costs which typically benefit several activities and programs. These types of costs may be allocated to federal programs by means of an indirect cost rate. Federal regulations allow auditing costs for districts spending over $750, 000 of federal funds to be classified as an indirect cost. 23

What can be Reclassified as Indirect Once your determine what you will want to reclassify (using caution not to double count expenditures the OPI has already determined to be considered indirect) The OPI has created a Indirect Cost Calculator for your use located at: http: //opi. mt. gov/Pdf/School. Finance/Acct/FY 12 IDCCalc. xls 24

Helpful References Federal “Green Guide” or Cost Allocation Guide for State and Local Governments http: //www. ed. gov/about/offices/list/ocfo/fipao/icgindex. html Montana OPI Indirect Cost Rate Information Page http: //www. opi. mt. gov/Finance&Grants/School. Finance/Index. html#gpm 1_12 Paul Taylor 444 -1257 ptaylor 2@mt. gov 25