11

Understanding the Federal Indirect Understanding the Federal Indirect Rate CalculationRate Calculation

Federal Restricted Indirect Cost Rates Federal Restricted Indirect Cost Rates for School Districtsfor School Districts

Pam PeppersPam PeppersSupervisor of School District/ESD Supervisor of School District/ESD

Financial ReportingFinancial Reporting(360) 725-6304(360) 725-6304

pam.peppers@k12.wa.uspam.peppers@k12.wa.us

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Federal Indirect Cost RatesFederal Indirect Cost Rates What is an indirect cost rate?What is an indirect cost rate? How do districts determine which rate to use?How do districts determine which rate to use? What does “fixed with carry-forward” mean?What does “fixed with carry-forward” mean? What is a distorting item? What is a distorting item? What is an indirect expenditure?What is an indirect expenditure? What is a space and occupancy plan?What is a space and occupancy plan? How is the indirect rate calculated?How is the indirect rate calculated? The district’s grant application is requiring the 5 The district’s grant application is requiring the 5

year agreement OSPI receives from DOE. Where year agreement OSPI receives from DOE. Where can I find the 5 year agreement?can I find the 5 year agreement?

Things to consider for the indirect pool and base.Things to consider for the indirect pool and base. Why was the indirect rate on the FY 05-06 F-196 Why was the indirect rate on the FY 05-06 F-196

different than the rate calculated on the FY 03-04 F-different than the rate calculated on the FY 03-04 F-196?196?

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What Is An Indirect Cost Rate?What Is An Indirect Cost Rate? An indirect cost rate is the maximum percent of dollars the An indirect cost rate is the maximum percent of dollars the

district can expend from state and federal grants for district can expend from state and federal grants for administrative costs. Certain grants may have a more administrative costs. Certain grants may have a more restrictive administrative cap. Indirect cost rates (limits) restrictive administrative cap. Indirect cost rates (limits) ensure that state and federal moneys are expended for ensure that state and federal moneys are expended for intended uses and for allowable costs, including intended uses and for allowable costs, including expenditures directly traceable to the program (direct expenditures directly traceable to the program (direct expenditures) plus a limited allowance for overhead or expenditures) plus a limited allowance for overhead or indirect expenditures.indirect expenditures.

Two rates are calculated for each district and are unique to Two rates are calculated for each district and are unique to

each district:each district: A “fixed with carry-forward” indirect cost rate is A “fixed with carry-forward” indirect cost rate is

calculated for each district for all of its restricted federal calculated for each district for all of its restricted federal grants.grants.

A “fixed with carry-forward” indirect cost rate is A “fixed with carry-forward” indirect cost rate is calculated for all of its unrestricted federal grants. calculated for all of its unrestricted federal grants.

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How Do Districts Determine Which Rate How Do Districts Determine Which Rate To Use?To Use?

Typically, restricted rates must be used for all federal Typically, restricted rates must be used for all federal awards where “supplement but not supplant” is in the awards where “supplement but not supplant” is in the authorizing language. Almost all U.S. Department of authorizing language. Almost all U.S. Department of Education federal programs fall into this category. Education federal programs fall into this category. The restricted rate is the lower of the two rates. The restricted rate is the lower of the two rates.

Unrestricted rates may be used for those federal Unrestricted rates may be used for those federal grants that do not have a supplant provision. The grants that do not have a supplant provision. The unrestricted rate uses the same calculation as the unrestricted rate uses the same calculation as the restricted rate except expenditures for maintenance restricted rate except expenditures for maintenance and grounds are included, resulting in a higher rate.and grounds are included, resulting in a higher rate.

If there is a question as to which rate you should use, If there is a question as to which rate you should use, consult the district grant writer or contact OSPI if the consult the district grant writer or contact OSPI if the grant flows through our agency.grant flows through our agency.

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What Does Fixed With Carry-Forward Mean?What Does Fixed With Carry-Forward Mean? A fixed with carry-forward provision is a rate computed A fixed with carry-forward provision is a rate computed

and fixed for a specified future school year based on an and fixed for a specified future school year based on an estimate of that school year’s level of operations. estimate of that school year’s level of operations. However, when the actual costs of that school year However, when the actual costs of that school year become known, the difference between the estimated become known, the difference between the estimated costs and the actual costs is “carried forward” as an costs and the actual costs is “carried forward” as an adjustment to a subsequent school year for which a rate adjustment to a subsequent school year for which a rate is established.is established.

For example:For example:o The 04-05 F-196 is used to calculate a rate of 3.6% for The 04-05 F-196 is used to calculate a rate of 3.6% for

the 06-07 school year (2-year lag).the 06-07 school year (2-year lag).o If the actual rate calculated at the end of the 06-07 If the actual rate calculated at the end of the 06-07

school year is 5.7%, then the adjusted rate of 5.7% school year is 5.7%, then the adjusted rate of 5.7% will be used for the 08-09 school year. will be used for the 08-09 school year.

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What Is A Distorting Item?What Is A Distorting Item?

For purposes of the indirect cost process, distorting items For purposes of the indirect cost process, distorting items are activities that do not occur regularly each year or are are activities that do not occur regularly each year or are one-time in nature (rather than ongoing). These activities one-time in nature (rather than ongoing). These activities “distort” the regular and normal expenditures of the “distort” the regular and normal expenditures of the district. Districts will need to determine and document district. Districts will need to determine and document expenditures they consider significant and distorting. expenditures they consider significant and distorting.

Distorting items reduce the direct expenditure base (the Distorting items reduce the direct expenditure base (the denominator) which increases the indirect rate.denominator) which increases the indirect rate.

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Distorting ItemsDistorting Items Flow-through grants, contingencies, election expenses, Flow-through grants, contingencies, election expenses,

renovations and alterations, and fines and penalties renovations and alterations, and fines and penalties charged in Program 97 are specific types of distorting charged in Program 97 are specific types of distorting items.items.

Flow-through grants are awards received by a school Flow-through grants are awards received by a school district and “passed through” to another district. The district and “passed through” to another district. The students in the district receiving the award do not students in the district receiving the award do not benefit by the flow-through award. If the grant amount benefit by the flow-through award. If the grant amount is $100,000, and the district passes $25,000 to another is $100,000, and the district passes $25,000 to another district, the amount of “flow-through” is $25,000.district, the amount of “flow-through” is $25,000.

Although the federal language includes contingencies Although the federal language includes contingencies as a distorting item, they are generally not applicable as a distorting item, they are generally not applicable to school districts.to school districts.

Election expenses charged to Program 97 are Election expenses charged to Program 97 are considered distorting if they are significant.considered distorting if they are significant.

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Distorting Items (cont.)Distorting Items (cont.)

Renovations and alterations may be considered distorting Renovations and alterations may be considered distorting if the expenditures are unusual, unexpected, and if the expenditures are unusual, unexpected, and significant. For example, this winter’s windstorm tore significant. For example, this winter’s windstorm tore portions of the roof off 2 of the districts schools, causing portions of the roof off 2 of the districts schools, causing not only roof damage but flooding as well. If the repair not only roof damage but flooding as well. If the repair costs are significant this may be considered a distorting costs are significant this may be considered a distorting item. Remember that any general fund expenditures item. Remember that any general fund expenditures coded to Object 9 (Capital Outlay) are always excluded coded to Object 9 (Capital Outlay) are always excluded from the indirect calculation so some of the costs may be from the indirect calculation so some of the costs may be excluded. Typically, these types of repairs are expended excluded. Typically, these types of repairs are expended in the Capital Projects Fund and are not included in the in the Capital Projects Fund and are not included in the federal rate calculation.federal rate calculation.

Fines and penalties assessed against the district by L&I, Fines and penalties assessed against the district by L&I, OSHA, WISHA, or IRS late fees for filing late payroll taxes OSHA, WISHA, or IRS late fees for filing late payroll taxes may be considered distorting if significant.may be considered distorting if significant.

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What Is An Indirect Expenditure?What Is An Indirect Expenditure?

Indirect costs (expenditures) are agency wide, general Indirect costs (expenditures) are agency wide, general management costs (i.e., activities for the direction and management costs (i.e., activities for the direction and control of the agency as a whole). General control of the agency as a whole). General management costs consist of administrative activities management costs consist of administrative activities necessary for the general operation of the agency, necessary for the general operation of the agency, such as accounting, budgeting, payroll preparation, such as accounting, budgeting, payroll preparation, personnel services, purchasing, and centralized data personnel services, purchasing, and centralized data processing.processing.

In theory, costs like heat, light, accounting, payroll, In theory, costs like heat, light, accounting, payroll,

and personnel might be charged directly to specific and personnel might be charged directly to specific programs if little meters could record minutes in a programs if little meters could record minutes in a cross-cutting manner. However, this is not practical; cross-cutting manner. However, this is not practical; therefore, indirect cost rates are used to distribute therefore, indirect cost rates are used to distribute those indirect expenditures. those indirect expenditures.

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Indirect ExpendituresIndirect Expenditures Audit costs charged to Program 97, Activity 11, but Audit costs charged to Program 97, Activity 11, but notnot charged charged

directly to another program, may be included in the indirect directly to another program, may be included in the indirect expenditure pool.expenditure pool.

Legal costs are generally not includable in the indirect expenditure Legal costs are generally not includable in the indirect expenditure pool.pool.

Costs for the Superintendent or Assistant Superintendent charged Costs for the Superintendent or Assistant Superintendent charged completely to Activity 12, but allocable to Activity 13 or 14 and 72-completely to Activity 12, but allocable to Activity 13 or 14 and 72-75 are considered indirect expenditures and are included in the 75 are considered indirect expenditures and are included in the calculation on the F-196. This pertains to small schools whose calculation on the F-196. This pertains to small schools whose superintendents wear multiple hats and have many responsibilities superintendents wear multiple hats and have many responsibilities in addition to being the superintendent.in addition to being the superintendent.

Other manual entry items included in the indirect expenditure pool Other manual entry items included in the indirect expenditure pool are:are:

Public relations costs, charged to Program 97, Activity 15.Public relations costs, charged to Program 97, Activity 15. Termination leave for federally supported staff not charged to Termination leave for federally supported staff not charged to

Program 97.Program 97. Pupil Management & Safety costs recorded in Program 97, Pupil Management & Safety costs recorded in Program 97,

Activity 25, if the district has a cost allocation plan.Activity 25, if the district has a cost allocation plan. Information Services recorded in Program 97, Activity 72.Information Services recorded in Program 97, Activity 72. Space and occupancy costs.Space and occupancy costs.

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What Is A Space And Occupancy Plan?What Is A Space And Occupancy Plan? Space and occupancy maintenance costs associated with Space and occupancy maintenance costs associated with

organization wide service functions, such as accounting, organization wide service functions, such as accounting, payroll, or personnel, may be included as general payroll, or personnel, may be included as general management costs if a space allocation or use study management costs if a space allocation or use study supports the allocation. supports the allocation.

As an example, if the district has done an analysis of the As an example, if the district has done an analysis of the total square footage for the total square footage for the central administration buildingcentral administration building, , and the business office occupies 25% of that total square and the business office occupies 25% of that total square footage, 25% of allowable expenditures may be included in footage, 25% of allowable expenditures may be included in the indirect pool. Therefore, 25% of the expenditures for the indirect pool. Therefore, 25% of the expenditures for the central administration building costs for supervision, the central administration building costs for supervision, grounds, operation of buildings, maintenance, utilities, grounds, operation of buildings, maintenance, utilities, security, and insurance may be included in the indirect security, and insurance may be included in the indirect pool (numerator).pool (numerator).

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How Is The Indirect Rate Calculated?How Is The Indirect Rate Calculated?

The simple answer is the numerator (indirect The simple answer is the numerator (indirect expenditures) divided by the denominator (direct expenditures) divided by the denominator (direct expenditures) equals the district indirect rate.expenditures) equals the district indirect rate.

The calculation on the F-196 “Schedule for Determining The calculation on the F-196 “Schedule for Determining School District Federal Restricted Indirect Cost Rates School District Federal Restricted Indirect Cost Rates Including Fixed With Carry-Forward Calculation” is a Including Fixed With Carry-Forward Calculation” is a standardized methodology which determines the Indirect standardized methodology which determines the Indirect Expenditure Pool (column 6) and the Direct Expenditure Expenditure Pool (column 6) and the Direct Expenditure Base (column 7). Those figures are used in the “Fixed Base (column 7). Those figures are used in the “Fixed with Carry-Forward” calculation to determine the indirect with Carry-Forward” calculation to determine the indirect rate to be used in the subsequent 2-year period.rate to be used in the subsequent 2-year period.

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XXXXX School District No. XXXData Requirements For Calculating Federal Indirect Cost Rate Including Fixed With Carry-Forward (Page 1 of 2)

For the Year Ended August 31, 2007

(Enter an amount in the following manual input item numbers, Option 1 Data Input, if applicable.)

DISTORTING ITEMS

1. Flow-through funds for programs 01-89, 98, and 99.15,000.00 item 3301 The amount entered here will be added to expenditures in Program 98, Activity 42 (excluding Object 9)

2. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Activity 11, Board of Directors.38,500.00 item 3311

3. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Activity 12, Superintendent's Office.Item 3321

4. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Activity 13, Business Office.Item 3331

5. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Activity 14, Human Resources.Item 3341

6. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Program 97, Activity 25, Pupil Management & Safety.Item 3351

7. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Program 97, Activity 61, Supervision.Item 3361

8. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Program 97, Activity 62, Grounds Maintenance.Item 3371

9. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Program 97, Activity 63, Operation of Buildings.Item 3381

10. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Program 97, Activity 64, Maintenance.Item 3391

11. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Program 97, Activity 65, Utilities.Item 3401

12. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Program 97, Activity 67, Building & Property Security.Item 3411

13. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Program 97, Activity 68, Insurance.Item 3421

14. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Activity 72, Information Systems.Item 3431

15. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Activity 73, Printing.Item 3441

16. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Activity 74, Warehousing.Item 3451

17. Flow-through funds or contingencies or election expenses or alterations or renovations or fines and penalties charged in Activity 75, Motor Pool.Item 3461

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XXXXX School District No. XXXData Requirements For Calculating Federal Indirect Cost Rate Including Fixed With Carry-Forward (Page 2 of 2)

For the Year Ended August 31, 2007

(Enter an amount in the following manual input item numbers, Option 1 Data Input, if applicable.)

INDIRECT EXPENDITURES

18. Audit costs recorded in Program 97, Activity 11, Board of Directors, and not directly charged to another program.49,528.47 Item 3471

19. Legal costs, associated with interpretation of laws and regulations, recorded in Program 97, Activity 11, Board of Directors, but not specifically associated with the Board of Directors.4,304.91 Item 3631

20. A. Costs recorded in Program 97, Activity 12, for the Superintendent, Deputy Superintendent, or Assistant Superintendent whose responsibilities are allocable to indirect costactivities 13, 14, and 72 thru 75. These positions are required to maintain supporting documentation if a portion of their responsibilities is allocable to these indirect cost activities.Include the salary and benefits of the secretary to the Superintendent, Deputy Superintendent, or Assistant Superintendent charged to Activity 12, if allocable to activities 13, 14, and 72 thru 75.Also include any other expenditures directly related to the above mentioned staff charged to Activity 12, which may include office supplies, travel, printing, warehousing,motor pool, and information systems.

B. Do not include capital outlay (Object 9) or other distorting items already reported on page 24, columns 2 or 4.Item 3481

21. The cost of Public Relations activities recorded in Program 97, Activity 15, and not directly charged to another program for the following:Costs for liaison with news media and government relations officers as a means of informing the general public on matters of public concern, such as notice of Federal awards, financial matters, etc. Do not include costs designed soley to promote the governmental unit.

510,000.25 Item 3641

22. Termination Leave costs for federally supported staff which have been charged to a state or local program. Do not include Termination Leave costs for federally supportedstaff charged to Program 97, Activity 13 or 14, as they are already included in the indirect calculation. These costs should not be charged directly to the federal award, but maybe considered an indirect expenditure.

Item 3651

23. Costs recorded in Program 97, Activity 25, UNDECIDED AT THIS TIME. Item 3691

24. Costs recorded in Program 97, Activity 72, for districtwide Information Service activities. Do not include expenditures for student records such as printing report cards or student transcripts.2,452,346.02 Item3701

25. Space and occupancy costs, excluding capital outlay, for general administration (organization-wide) charged in Program 97, Activity 61, Supervision, which isallocable to activities 13, 14, and activity 12 if applicable, if a space plan supports the allocation.

Item 3491

26. Space and occupancy costs, excluding capital outlay, for general administration (organization-wide) charged in Program 97, Activity 62, Grounds Maintenance,which is allocable to activities 13, 14, and activity 12 if applicable, if a space plan supports the allocation.

Item 3501

27. Space and occupancy costs, excluding capital outlay, for general administration (organization-wide) charged in Program 97, Activity 63, Operation of Buildings,which is allocable to activities 13, 14, and activity 12 if applicable, if a space plan supports the allocation.

Item 3511

28. Space and occupancy costs, excluding capital outlay, for general administration (organization-wide) charged in Program 97, Activity 64, Maintenance, which isallocable to activities 13, 14, and activity 12 if applicable, if a space plan supports the allocation.

Item 3521

29. Space and occupancy costs, excluding capital outlay, for general administration (organization-wide) charged in Program 97, Activity 65, Utilities, which isallocable to activities 13, 14, and activity 12 if applicable, if a space plan supports the allocation.

Item 3531

30. Space and occupancy costs, excluding capital outlay, for general administration (organization-wide) charged in Program 97, Activity 67, Building & Property Security,which is allocable to activities 13, 14, and activity 12 if applicable, if a space plan supports the allocation.

Item 3541

31. Space and occupancy costs, excluding capital outlay, for general administration (organization-wide) charged in Program 97, Activity 68, Insurance, which is allocable toactivities 13, 14, and activity 12 if applicable, if a space plan supports the allocation.

Item 3551

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2006-07 F-196 Schedule for Determining School District Federal Restricted Indirect Cost Rate Including Fixed With Carry-Forward Calculation for FY 2008-09from input item from input item

numbers on page 22 numbers on page 23Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7

---------------------------EXCLUDED--------------------------- (Added to (Pool) (Base)TOTAL PROGRAM CAPITAL DEBT DISTORTING Column 7) INDIRECT DIRECT

Program and Activity Titles EXPENDITURES OUTLAY SERVICE ITEMS UNALLOWABLE EXPENDITURES EXPENDITURES

Total Programs 01-89, 98, 99 211,829,349.29 148,307.18 XXXX 3,834,955.43 XXXX XXXX 207,846,086.68

Program 97 Activities Numerator Denominator11 Board of Directors 818,646.04 XXXX 38,500.00 726,312.56 53,833.48 XXXX 3471+363112 Superintendent's Office 853,923.78 XXXX 853,923.78 XXXX13 Business Office 2,219,973.64 XXXX XXXX 2,219,973.64 XXXX14 Human Resources 1,735,160.94 XXXX XXXX 1,735,160.94 XXXX15 Public Relations 514,348.55 236.84 XXXX 4,111.46 510,000.25 XXXX item 364125 Pupil Management and Safety 341,404.80 XXXX 341,404.80 XXXX XXXX CORRECTION61 Supervision 652,443.77 16,010.12 XXXX 636,433.65 XXXX62 Grounds Maintenance 1,067,752.04 129,107.35 XXXX 938,644.69 XXXX63 Operation of Buildings 8,715,046.68 XXXX 8,715,046.68 XXXX64 Maintenance 5,988,473.94 409,517.31 XXXX 5,578,956.63 XXXX65 Utilities 5,714,536.10 XXXX 5,714,536.10 XXXX67 Building and Property Security 688,785.01 XXXX 688,785.01 XXXX68 Insurance 1,240,522.95 XXXX 1,240,522.95 XXXX72 Information Systems 2,511,634.03 XXXX 59,288.01 2,452,346.02 XXXX item 370173 Printing 665,555.64 40,105.41 XXXX XXXX 625,450.23 XXXX74 Warehousing 507,313.61 XXXX XXXX 507,313.61 XXXX75 Motor Pool 48,753.28 XXXX XXXX (48,753.28) XXXX not good!83 Interest 654.05 654.05 XXXX XXXX XXXX XXXX84 Principal 10,813.45 10,813.45 XXXX XXXX XXXX XXXX85 Debt-Related Expenditures XXXX XXXX XXXX XXXX

Total Program 97 34,246,989.02 643,730.31 11,467.50 38,500.00 25,497,966.32 10,507,670.91 XXXX

Sub-Total All Programs 246,076,338.31 792,037.49 11,467.50 3,873,455.43 XXXX

10,507,670.91 207,846,086.68

Unallowable CostsXXXX XXXX XXXX XXXX

(24,632,436.00)XXXX

25,497,966.32

Totals 246,076,338.31 792,037.49 11,467.50 3,873,455.43 0.00 10,507,670.91 233,344,053.00

--- Fixed with carry-forward restricted indirect rate calculation

1. Indirect rate used for FY 06-07 (from 2 year prior actuals FY 04-05) (6191 Index 1) 0.0362. Current Year Indirect Expenditures from Column 6 (6101) 10,507,670.913. Current Year Direct Expenditures from Column 7 (6121) 233,344,053.004. Indirect rate * Direct Expenditures (line 1 * line 3) 8,400,385.915. Net Indirect Expenditure pool adjusted amount (line 4 - line 2) (2,107,285.00)6. Line 6A(1) or line 6B(2) is your adjusted Indirect Expenditure pool

A) If line 5 is a positive number: 6a If line 5 is a positive number: --------> 1) Subtract from Indirect Expenditures (line 2 - line 5), orB) If line 5 is a negative number: 6b If line 5 is a negative number: 1) Change to a positive number, and Change to a positive number 2,107,285.00 2) Add to Indirect Expenditures (line 6B(1) + line 2) and add to line 2 12,614,955.91

7. Calculated FY 08-09 indirect cost rate, line 6(A) or 6(B) is divided by Line 3. 0.054

8. Effective FY 08-09 restricted indirect cost rate (6191 Index 4) 0.054

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2006-07 F-196 Schedule for Determining School District Federal Restricted Indirect Cost Rate Including Fixed With Carry-Forward Calculation for FY 2008-09from input item from input item

numbers on page 22 numbers on page 23Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7

---------------------------EXCLUDED--------------------------- (Added to (Pool) (Base)TOTAL PROGRAM CAPITAL DEBT DISTORTING Column 7) INDIRECT DIRECT

Program and Activity Titles EXPENDITURES OUTLAY SERVICE ITEMS UNALLOWABLE EXPENDITURES EXPENDITURES

Total Programs 01-89, 98, 99 C/NS 5321-97XXX C/NS 5091 - 97XX9 XXXX C/NS 9842X + 3301 XXXX XXXX C/NS col 1-2-3-4+5-6

Program 97 Activities Numerator Denominator11 Board of Directors 9711X 97119 XXXX 3311 C/NS col 1-2-3-4-6 3471+3631 XXXX12 Superintendent's Office 9712X 97129 XXXX 3321 C/NS col 1-2-3-4-6 3481 XXXX13 Business Office 9713X 97139 XXXX 3331 XXXX C/NS col 1-2-3-4 XXXX14 Human Resources 9714X 97149 XXXX 3341 XXXX C/NS col 1-2-3-4+3651 XXXX15 Public Relations 9725X 97259 XXXX XXXX C/NS col 1-2-3-4-6 3641 XXXX STILL ON F-19625 Pupil Management and Safety 9725X 97259 XXXX 3351 C/NS col 1-2-3-4-6 XXXX XXXX CORRECTION61 Supervision 9761X 97619 XXXX 3361 C/NS col 1-2-3-4-6 3491 XXXX62 Grounds Maintenance 9762X 97629 XXXX 3371 C/NS col 1-2-3-4-6 3501 XXXX63 Operation of Buildings 9763X 97639 XXXX 3381 C/NS col 1-2-3-4-6 3511 XXXX64 Maintenance 9764X 97649 XXXX 3391 C/NS col 1-2-3-4-6 3521 XXXX65 Utilities 9765X 97659 XXXX 3401 C/NS col 1-2-3-4-6 3531 XXXX67 Building and Property Security 9767X 97679 XXXX 3411 C/NS col 1-2-3-4-6 3541 XXXX68 Insurance 9768X 97689 XXXX 3421 C/NS col 1-2-3-4-6 3551 XXXX72 Information Systems 9772X 97729 XXXX 3431 C/NS col 1-2-3-4-6 3701 XXXX NEW73 Printing 9773X 97739 XXXX 3441 XXXX C/NS col 1-2-3-4 XXXX74 Warehousing 9774X 97749 XXXX 3451 XXXX C/NS col 1-2-3-4 XXXX75 Motor Pool 9775X 97759 XXXX 3461 XXXX C/NS col 1-2-3-4 XXXX83 Interest 9783X 97839 97837 XXXX XXXX XXXX XXXX84 Principal 9784X 97849 97847 XXXX XXXX XXXX XXXX85 Debt-Related Expenditures 9785X 97859 97857 XXXX XXXX XXXX XXXX

Total Program 97 97XXX 97XX9

C/S 3561 (97837+97847+978

57)C/S 3571 (prog 97 Distorting Items)

C/S 3591 (total prog 97, Unallowable)

C/S 6081 (Total prog 97, Indirect

Expenditures)XXXX

Sub-Total All Programs 5321 5091 3561C/S 3581 Total

Distorting ItemsXXXX

C/S 6101 (Total Indirect

Expenditures)C/S 6111 (Total Direct

Expenditures)

Unallowable CostsXXXX XXXX XXXX XXXX

C/NS (3591 displayed as a negative

number)XXXX

3591

Totals 5321 5091 3561 3581C/NS (3591-3591 s/b

zero) 6101 C/S 6121 (6111 + 3591)

--- Fixed with carry-forward restricted indirect rate calculation

1. Indirect rate used for FY 06-07 (from 2 year prior actuals FY 04-05) (6191 Index 1) 6191 Index 12. Current Year Indirect Expenditures from Column 6 (6101) 6101 (col 6)3. Current Year Direct Expenditures from Column 7 (6121) 6121 (col 7)4. Indirect rate * Direct Expenditures (line 1 * line 3) line 1 * line 35. Net Indirect Expenditure pool adjusted amount (line 4 - line 2) line 4 - line 26. Line 6A(1) or line 6B(2) is your adjusted Indirect Expenditure pool

A) If line 5 is a positive number: 6a If line 5 is a positive number: 1) Subtract from Indirect Expenditures (line 2 - line 5), or line 2 - line 5B) If line 5 is a negative number: 6b If line 5 is a negative number: 1) Change to a positive number, and Change to a positive number 2) Add to Indirect Expenditures (line 6B(1) + line 2) and add to line 2

7. Calculated FY 08-09 indirect cost rate, line 6(A) or 6(B) is divided by Line 3. (6A or 6B / line 3 )

8. Effective FY 08-09 restricted indirect cost rate (6191 Index 4) 6191 index 4

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Where Can I Find a Copy of the Five Year Where Can I Find a Copy of the Five Year DOE Agreement?DOE Agreement?

Once the Department of Education accepts Once the Department of Education accepts the methodology our state has proposed, the methodology our state has proposed, OSPI receives an agreement from DOE. This OSPI receives an agreement from DOE. This agreement is kept on file with School agreement is kept on file with School Apportionment and Financial Services Apportionment and Financial Services (SAFS). We have recently posted the 5 year (SAFS). We have recently posted the 5 year agreement, which ended August 31, 2006, to agreement, which ended August 31, 2006, to www.k12.wa.us/safs/FinancialResources.aspwww.k12.wa.us/safs/FinancialResources.asp. . As soon as DOE accepts our current proposal As soon as DOE accepts our current proposal we will post the new agreement to this we will post the new agreement to this website.website.

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Things To Consider For The Indirect Pool Things To Consider For The Indirect Pool And BaseAnd Base

Manual input item #3641 will still be used for Public Manual input item #3641 will still be used for Public Relations costs. Districts will determine what portion of Relations costs. Districts will determine what portion of the costs recorded in Program 97, Activity 15, are for the costs recorded in Program 97, Activity 15, are for liaison with news media and government relations liaison with news media and government relations officers, such as notices of Federal concern, financial officers, such as notices of Federal concern, financial matters, school calendar, newsletters, etc., and enter matters, school calendar, newsletters, etc., and enter that dollar amount in item #3641. that dollar amount in item #3641. If no entry is If no entry is made in this item number the total expenditures made in this item number the total expenditures in Program 97, Activity 15, will be included in the in Program 97, Activity 15, will be included in the direct base (denominator).direct base (denominator).

New in 06-07New in 06-07—Pupil Management and Safety —Pupil Management and Safety expenditures in Program 97, Activity 25, will be expenditures in Program 97, Activity 25, will be manually input in item #3691 for the Restricted Indirect manually input in item #3691 for the Restricted Indirect Rate, only if the district has done a cost allocation plan. Rate, only if the district has done a cost allocation plan. Guidance will be provided at a later date, per DOE Guidance will be provided at a later date, per DOE instructions. These expenditures will continue to be instructions. These expenditures will continue to be included in the Unrestricted Indirect Pool.included in the Unrestricted Indirect Pool.

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Things To Consider For The Indirect Pool Things To Consider For The Indirect Pool And BaseAnd Base

New in 06-07New in 06-07—Costs recorded in Program 97, Activity —Costs recorded in Program 97, Activity 72,for districtwide Information Systems expenditures will be 72,for districtwide Information Systems expenditures will be entered in manual input item #3701. Exclude costs for entered in manual input item #3701. Exclude costs for student records such as printing report cards or transcripts. student records such as printing report cards or transcripts. If no entry is made in this item number the total If no entry is made in this item number the total expenditures in Program 97, Activity 72, will be expenditures in Program 97, Activity 72, will be included in the direct base (denominator).included in the direct base (denominator).

Motor Pool expenditures in Program 97, Activity 75, must Motor Pool expenditures in Program 97, Activity 75, must only be for cars or vans used to transport staff to only be for cars or vans used to transport staff to conferences or meetings. Expenditures associated with conferences or meetings. Expenditures associated with specific programs, extracurricular, or ASB, should be directly specific programs, extracurricular, or ASB, should be directly charged to those programs.charged to those programs.

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Things To Consider For The Indirect Pool Things To Consider For The Indirect Pool And Base (cont.)And Base (cont.)

Remember that Superintendent costs, and those costs Remember that Superintendent costs, and those costs associated with the Superintendent’s secretary, are not associated with the Superintendent’s secretary, are not allowed in the restricted indirect pool. The only exception allowed in the restricted indirect pool. The only exception is if the Superintendent and/or the secretary are coded is if the Superintendent and/or the secretary are coded 100% to Activity 12 but have responsibilities in the business 100% to Activity 12 but have responsibilities in the business office, human resources, print center, information systems, office, human resources, print center, information systems, motor pool, or warehouse. The expenditures allocable to motor pool, or warehouse. The expenditures allocable to these other activities are considered indirect and can be these other activities are considered indirect and can be entered in manual input item #3481. Remember to entered in manual input item #3481. Remember to exclude Capital Outlay (Object 9).exclude Capital Outlay (Object 9).

Check to make sure there aren’t any negative dollars in the Check to make sure there aren’t any negative dollars in the printing or motor pool activities. This reduces the indirect printing or motor pool activities. This reduces the indirect rate. The example in this presentation has a negative rate. The example in this presentation has a negative $48,753 in Motor Pool, which reduced the indirect pool (not $48,753 in Motor Pool, which reduced the indirect pool (not a good thing!).a good thing!).

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Why Was Our District’s Rate Different on Why Was Our District’s Rate Different on the FY 05-06 F-196?the FY 05-06 F-196?

The rates calculated for some districts on the FY 03-04 F-196 (to The rates calculated for some districts on the FY 03-04 F-196 (to be used in 05-06) were not calculated correctly. In order for OSPI be used in 05-06) were not calculated correctly. In order for OSPI to be in compliance, we were required to manually correct the to be in compliance, we were required to manually correct the rates in our VAX system. This caused some rates from the FY 03-rates in our VAX system. This caused some rates from the FY 03-04 database to be different than they were on the actual 03-04 F-04 database to be different than they were on the actual 03-04 F-196. Districts with an increase of greater than 1% were notified 196. Districts with an increase of greater than 1% were notified and allowed to change their rate in the grant system if they chose and allowed to change their rate in the grant system if they chose to. Districts whose rates decreased due to the recalculation were to. Districts whose rates decreased due to the recalculation were allowed to use the higher rate in 05-06. However, to ensure that allowed to use the higher rate in 05-06. However, to ensure that future rates were accurate, the VAX system was manually future rates were accurate, the VAX system was manually corrected to reflect the lower rate. corrected to reflect the lower rate.

This situation may also occur on the FY 06-07 F-196. The rates This situation may also occur on the FY 06-07 F-196. The rates calculated on the 04-05 F-196 may not have been calculated calculated on the 04-05 F-196 may not have been calculated correctly.correctly.

If your district noticed a different 03-04 rate on the 05-06 F-196, If your district noticed a different 03-04 rate on the 05-06 F-196, or notice a different 04-05 rate on the 06-07 F-196, please contact or notice a different 04-05 rate on the 06-07 F-196, please contact me for more information.me for more information.

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Questions and DiscussionQuestions and Discussion

Changes in guidanceChanges in guidanceo We are still working with DOE on the five year plan We are still working with DOE on the five year plan for for Washington State. The DOE requirements may Washington State. The DOE requirements may create some create some changes in the F-196 calculation.changes in the F-196 calculation.

OSPI will provide more information on indirects during OSPI will provide more information on indirects during the F-196 Annual Financial Statements training. This will the F-196 Annual Financial Statements training. This will include any changes due to DOE requirements.include any changes due to DOE requirements.

Other Questions or Discussion?Other Questions or Discussion?