Fiscal Year Ratesprovides guidance for all fiscal years Authority Office of Management and Budget OMB Circular A87 US Department of Education Delegates authority for rate determination to states ID: 1027257
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2. Indirect cost calculationsFiscal Year #### Rates—provides guidance for all fiscal years
3. AuthorityOffice of Management and Budget (OMB) – Circular A-87US Department of EducationDelegates authority for rate determination to statesDelegation agreement renews every five years3
4. Chart for Total Costs for funds 1, 2, 514
5. What are Indirect Costs?Costs of a general nature which are not readily identifiable with the activities of the grant but are incurred for the joint benefit of those activities and other activities or programs of the organization.5
6. What are Indirect Costs? Cont.Central accounting function6
7. What are Direct Costs?Costs that are incurred specifically for one activity and can be identified specifically with that activity.7
8. What are excluded Costs?Capital outlay8
9. What are unallowed Costs?Items for which federal funds cannot be used.9
10. What are unallowed Costs? Cont.Fines and penalties10
11. Indirect Cost RateThe indirect cost rate is a device for determining what portion of allowable general administrative expenses each federal grant should bear11
12. Indirect Cost Rate FormulaFORMULA: indirect costs x 90%direct costs + unallowed costs12
13. Indirect Cost Rate calculationsAudited AFR is used for the calculationsExpenditures must be classified properly!FY 18 is used to calculate FY 19 rates13
14. Federal reviewFederal review of rate methodology going on nowErrors already found:Apply the rates from July 1 – June 30KBE must approveAdjustment opportunityMore changes could be required14
15. 1. Adjustment opportunityImpossible to get every district calculation correct simply by applying the account structureDistricts must review and certify the rates by affirming adjustment amounts, if any15
16. 2. KBE must approve the ratesAgreement is between USDE and KDELocal boards should recognize the rate but approval is not required16
17. 3. Apply the rates July 1 – June 30Rates must be applied the same way they are calculated17
18. 3. Apply the rates July 1 – June 30 cont.If you used the FY 17 rate for Jul, Aug, or Sept 2017 you must correct any overchargeCalculate the indirect costs using the FY 18 rate for those monthsReduce future indirect costs in FY 18 to correct the total charged18
19. HOW DO I KNOW WHAT ADJUSTMENTS TO MAKE?Results of your calculation must comply with OMB2 CFR 200 web link 19
20. Sample adjustmentsUnallowed costs per 2 CFR 200Donations and contributionsEmployee health and welfare costsCoding Errors not Material to the AFR 20
21. HOW DO I MAKE ADJUSTMENTS?“Instructions for Indirect Cost Adjustments for Calculating Indirect Cost Rates”KDE website 21
22. HOW DO I MAKE ADJUSTMENTS? CONT.Log onto SEEK system“Financial Forms & Tools”“Indirect Cost Adjustments”Enter adjustment amountsPositive number will subtract the amountNegative number will add the amount“Save” 22
23. WHAT IF I HAVE NO ADJUSTMENTS?23You must log into the system anywayCheck box
24. What if I need to adjust again?No problemSimply repeat the process 24
25. CERTIFICATION25By completing the adjustment form:Certify accuracy
26. When do I need to do this?Window for adjustments will be open April 1 – May 1 26
27. RESOURCES2 CFR 200Cost Allocation Guide for State and Local Governments (USDE)KDE websiteRate calculationsSummary guidance 27
28. Questions: email finance.reports@education.ky.gov28