1. Indirect Cost Rate Proposal Region 11 Education Service Center January 28, 2015

2. Introduction to New Process Effective September 1, 2014, ISDs: Submit an annual request to TEA for an indirect cost rate Indirect Cost Rate Proposal (ICRP) ICRP is part of a new delegation agreement to TEA recently approved by USDE Charter Schools: FASRG, Module 10, Page 9 – Contact Division of Financial Audits The ICRP is a set of three documents: ICRP Workbook (Excel), for data collection and submission A certification of the information submitted in the ICRP Workbook The organizational chart the ISD had in place during the same fiscal year as that documented in the annual financial report used to complete the ICRP Workbook.

3. Purpose of Indirect Cost Rates Indirect cost rates are used to determine the amount of district-wide administrative costs that can be recovered for managing federal and state grants Examples: costs related to accounting, budgeting, purchasing, auditing, and payroll processing. Indirect costs can be transferred from each applicable grant to your district’s general fund as compensation for the administrative costs incurred by managing the grant Indirect costs, once transferred to the general fund, do not need to be tracked

4. Timeframe ICRPs due February (ICRPs for 2015-2016 are due by February 13, 2015) TEA reviews ICRPs through April Districts will be notified for clarifications and or necessary changes Resubmission may be required Indirect cost rates will be published for each district in May The published indirect cost rate will be effective from July 1, of the year in which it is issued, through June 30 of the following year. Example: July 1, 2015 through June 30, 2016

5. Types of Indirect Cost Rates: Restricted and Unrestricted Restricted Rates: Restricted rates must be used for those of your federal and state grants that are subject to the supplement, not supplant requirement. The supplement, not supplant requirement means that grant funds must only be used to enhance existing state or local funds or activities, and must not be used to replace state or local funds or activities. Most of the federal and state grants awarded by TEA are subject to this requirement, including, but not limited to, the following: Examples: Title I, Part A Programs: Local Education Agencies and Migrant Education: Basic State Formula Grant Program Restricted rate requirements should be noted in the Program Guidelines for each grant. If not, check with the awarding agency. In general, all state grants are subject to the requirement. Other restrictions may apply such as limits on administrative costs. These restrictions may limit the amount of indirect cost revenue that can be claimed. Check the Program Guidelines, or The awarding agency.

6. Types of Indirect Cost Rates: Restricted and Unrestricted (Continued) Unrestricted Rates Unrestricted rates are used for federal and state grants that are not subject to the federal supplement, not supplant requirement. Examples of grants not subject to the supplement, not supplant requirement are: Child Nutrition Program School Health and Related Services Unrestricted rate requirements should be noted in the Program Guidelines for each grant. If not, check with the awarding agency

7. Components of the Proposal Certification ICRP Worksheet Organizational chart Note: ISDs must submit all three documents by the annual deadline to receive their indirect cost rates for the next fiscal year.

8. Certification: What are you certifying? All costs included in this proposal are allowable Certain costs have been classified as unallowable costs in accordance with district’s accounting or cost policies All costs included in this proposal are properly allocable on the basis of a beneficial or causal relationship Costs that have been classified as indirect costs are not also classified as direct costs. Similar types of costs have been classified consistently The federal government will be notified of any accounting changes that would affect the predetermined rate. All records and documentation supporting the indirect cost allocation plan will be retained for a period of three years The district’s accounting records are maintained in accordance with Module 1, Financial Accounting and Reporting, of TEA’s Financial Accountability System Resource Guide All costs identified as governmental funds and food service enterprise funds, are included if applicable.

9. Certification: How? The certification must be signed by the district’s superintendent, chief executive officer (CEO), or chief financial officer (CFO). To complete the certification: 1. Enter the name of your school district. 2. Enter the name of the district official who will be signing the form. 3. Select the official’s title from the pulldown menu. 4. Print the certification tab. 5. Have the superintendent, CEO, or CFO sign and date the printed page. 6. Scan the signed and dated page. 7. Upload the scanned certification with your ICRP

10. Completing the Indirect Cost Rate Proposal Data Source: (A district’s actual costs for a fiscal year will be used to calculate indirect cost rates) Three sections of audited annual financial and compliance report (AFR) (2013-2014 financial report for calculation of the 2015-2016 IRC) 1. Statement of Revenues, Expenditures, and Changes in Fund Balances—Governmental Funds, the 2. Statement of Revenues, Expenditures, and Changes in Fund Net Position—Proprietary Funds, and 3. The capital asset section of the Notes to the Financial Statements. Other financial reports that identifies actual costs by object code. Since AFRs do not provide that level of detail additional reports will be required.

11. Organization Chart The organization chart tab in the workbook is only an example of an appropriate organizational chart. The organizational chart must reflect the organizational structure that was in place during the same fiscal year as the annual financial and compliance report you use to complete the ICRP. The organization chart must support the positions whose office space, salaries, and fixed costs you entered in the U-1 and restricted rate adjustment tab. You must upload your district’s organizational chart with your ICRP.

12. Resources Indirect Cost Rate Proposal Guidance Handbook for School Districts Appendices Financial Accountability System Resource Guide ( ICRP Handbook states that TEA is in the process of revising Module 1)

13. Submission of Proposal Log on to the TEA secure environment, TEASE. Select GFFC Reports and Data Collections. Select Upload Response Documents. Select one of the following documents from the pulldown menu: a. ICRP excel workbook b. ICRP certification c. ICRP organizational chart Select the school year for which you are requesting an indirect cost rate. If you are submitting an ICRP in February of 2015, select the 2015–2016 school year. Select Upload Document. Repeat steps to upload each of the three required documents.

14. Group Discussion Comments Questions Links: Indirect Cost Rates http://tea.texas.gov/Finance_and_Grants/Financial_Accountability/Financial__Accou ntability_System_Resource_Guide/ http://tea.texas.gov/Finance_and_Grants/Financial_Accountability/Financial__Accou ntability_System_Resource_Guide/