HEA Section 203d What is the 2 Admin Cost Cap and What are Admin Costs An eligible partnership that receives a TQP grant may not use more than two percent of the funds provided to administer the grant ID: 1003487
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1. 2% Administrative Cost CapHEA Section 203(d)
2. What is the 2% Admin Cost Cap and What are Admin Costs?An eligible partnership that receives a TQP grant may not use more than two percent of the funds provided to administer the grant.ALL TQP grantees are required to comply with the 2% Admin Cost Cap. Administrative costs are grant expenses associated with the implementation of the TQP grant. Administrative costs can be: Personnel or Non-personnelDirect or IndirectGenerally, direct administrative costs differ from indirect administrative costs in that the latter are considered organization-wide costs.
3. Examples of Administrative Costs
4. How is the 2% Administrative Cost Calculated?The 2% Administrative Cost is calculated on both Federal Funds and Nonfederal Funds.Example: $1,000,000 TQP grant = $10,000.00 Federal funds $10,000.00 Nonfederal funds $20,000.00 Total funds available to pay for administrative costs.*Funds available for administrative costs should be split evenly between Federal and Nonfederal budgets.
5. Indirect Cost Rate (ICR) REMINDERS!TQP is a training grant with a restricted ICR of 8%. TQP grantees may not charge more than 8% for indirect costs.FOR MOST GRANTEES, you will hit the 2% Administrative Cost Cap before being able to charge the full 8% restricted ICR.Only grantees with a Separated F&A ICR may charge the 8% restricted rate.Make sure the effective period of your ICR is the most current agreement on file.
6. How to Read your ICR Agreement?TQP grantees have one of FOUR types of ICR agreements:Combined F&A RateLEA Restricted RateSeparated F&A RateDe Minimis RateNOTE: Any exhibits, attachments, or supplemental materials provided to you by your cognizant agency or materials you provided to them to support the development of the agreement ARE NOT part of the agreement and cannot be used for purposes of charging indirect costs to any Federal grant.
7. Combined F&A Rate AgreementUnless your agreement EXPLICITLY identifies separate Administrative rates, within the formal pages of your ICR, you have a combined F&A rate.Combined F&A rate holders cannot charge more than 2% indirect cost to the TQP grant90% of all TQP grants have a Combined F&A ICR agreement.
8. Office of Management and Budget (OMB)The decision was made by OMB in their July 2017 OMB FAQ document on the issue of relationship of administrative costs and indirect costs:https://www.dol.gov/sites/dolgov/files/OASAM/legacy/files/July2017-UniformGuidanceFrequentlyAskedQuestions.pdfSynopsis:For grantees with a combined F&A rate, every indirect cost charged to the TQP grant is treated as an administrative cost and subject to the 2% cost cap.Once a grantee hits the 2% admin cost cap, you may not charge any additional indirect costs to the grant, since all indirect costs are treated as additional administrative costs.
9. Local Education Agency (LEA) Negotiated Restricted Rates LEA rates are negotiated by the State Educational Agency (SEA)LEAs must use their own negotiated restricted rate.LEA rates are usually lower than 8% but often are lower than 2%.5% of all TQP grants have an LEA ICR negotiated agreement.
10. De Minimus Rate Agreement Some grantees, usually nonprofit organizations, without a negotiated ICR agreement may use the 10% De Minimis rate for most programs.All De Minimis rates are considered Combined F&A rates, and are subject to the 2% administrative cost cap.4% of all TQP grants have De Minimis ICR agreements.
11. Separated F&A Rate Agreement Separated F&A ICR agreements explicitly separate administrative rates. (bottom image)The separate rate calculations must appear within the text of the formal ICR agreement, not in an exhibit. 1% of all TQP grants have a Separated ICR agreement.
12. Indirect Cost Rate RECAP:
13. Knowledge Check1As a grantee, I have a De Minimus Rate. What is the rate that we can charge for indirect cost?1. 8%2. 10%3. 2%ANSWER:
14. ANSWER1As a grantee, I have a De Minimus Rate. What is the rate that we can charge for indirect cost?2%
15. Knowledge Check2Below are three examples of services that may be performed in order to implement a TQP grant. Which one is considered an administrative cost and would be subject the 2% Admin Cost Cap?1. Developing systems and procedures, including management information systems, for assuring compliance with program requirements;2. Preparing reports and other documents related to the program requirements; 3. Divisional level administrative services such as program specific accounting, auditing or legal activities.ANSWER:
16. ANSWER2Below are three examples of services that may be performed in order to implement a TQP grant. Which one is considered an administrative cost and would be subject the 2% Admin Cost Cap?Divisional level administrative services such as program specific accounting, auditing or legal activities.
17. Knowledge Check3What type of indirect cost rate agreement is needed in order to charge the full 8% restricted rate?LEA Restricted RateCombined F&A RateSeparated F&A RateANSWER:
18. ANSWER3What type of indirect cost rate agreement is needed in order to charge the full 8% restricted rate?Separated F&A Rate