1. Introduction to Indirect Costs Claiming Your “Fair Share”
Presented by:
Alan Tiano, GPC, CGMS
Broward County
Grants Administrator
Please set your phones to meeting mode. I understand it’s hard to disconnect for a couple of hours and would appreciate your efforts to stay focused on the class.
I also acknowledge that during business hours, people may need your input and I support you taking a moment to respond to any emergencies that may arise in your office. 
You all face many challenges as you manage your programs and budgets.
Funds are always tight and advanced planning is a necessity.
For federal and some state grants, regulations are changing.

2. Define Direct vs Indirect Modified Total Direct Costs
Class Objectives
Define Direct vs Indirect
Modified Total Direct Costs
Objectives of Indirect Cost Regulations
Submitting an Indirect Cost Proposal
Requirements for pass-through entities (Sub Awards)
Unrecovered Indirect Costs
• Identify the opportunities and options available to collect these costs (There is more than one way to collect. Let us discuss the options!)
Learn how to accurately compute IDC (Now that I have the components, how do I come up with the magic number?)
Make the distinction between Direct and IDC. (Be careful not to confuse these two!)
• Know the regulations that govern the collection of IDC (There are opportunities and pitfalls in the new regulations)
• Define Modified Total Direct Costs (What is THIS?)

3. Administrative Costs (Direct) vs Indirect Costs
Direct costs are those costs that can be identified specifically with a particular final cost objective, or that can be directly assigned to such activities relatively easily with a high degree of accuracy
What are indirect costs? (It’s easier if we
identify direct costs first.)

4. Application to Federal awards:
Direct Costs can be Identified with the Federal award, rather than the nature of the goods and services involved, is the determining factor in distinguishing direct from indirect (F&A) costs of Federal awards

5. Common or Joint Objectives Necessary to run the organization
§ Indirect (F&A) costs.
Organizational Costs
Common or Joint Objectives
Necessary to run the organization
Can’t identify with a project or program
NOT READILY IDENTIFIABLE WITH THE PROGRAM/PROJECT
organizational costs that are incurred for common or joint objectives necessary to operate the organization.
They are not readily identifiable with a particular project or program.
WHAT DO YOU THINK ARE SOME EXAMPLES OF THESE KINDS OF EXPENSES?

6. Indirect Costs pay for facilities and services that make it possible for you to do your work
Executive Offices
Attorney’s Office
Budget Office
Facilities Maintenance
Finance and Accounting
Records Dept
IT Services
Purchasing Division
Human Resources
Security
Auditor’s Office
How many clients would you be able to serve if we didn't have these services?

7. In 2014 Congress released new regulations for federal grants.
PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UGG)
It streamlines and consolidates government requirements for receiving and using federal awards so as to reduce administrative burden and improve outcomes.
Included in this law are new rules and guidelines for indirect costs.
PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS
It was published in the Federal Register (79 Fed. Reg ) on December 19, 2014, and became effective for new and continuation awards issued on or after December 26, 2014

8. Objectives of Indirect Cost Regulations
Feds bear “fair share” of costs
Provide guidelines for organizations concerning reimbursement requirements
Provide uniform standards of allowability and allocation
Simplify intergovernmental relations
The feds have realized that the grantees are helping to achieve mission and goals and should contribute to the expenses of delivering the services.
Shouldn’t the Federal Government pay it share of our indirect costs in order for us to deliver the services it needs to fulfill it’s mission?

9. Submitting an Indirect Cost Proposal
The governmental unit desiring to claim indirect costs under Federal awards must prepare an indirect cost rate proposal and related documentation to support those costs.
A governmental agency that receives more than $35 million in direct Federal funding must submit its indirect cost rate proposal to its cognizant agency for indirect costs.

10. What is a Cognizant Agency?
To simplify relations between Federal grantees and awarding agencies, OMB established the cognizant agency concept, under which a single agency represents all others in dealing with grantees in common areas.
The cognizant Federal agency is generally the agency that provides the largest amount of direct Federal funds to the organization.
Discuss the difference between Cognizant Agency for indirect costs or Cognitive Agency for audits.

11. 2017 Indirect Cost Rate Agreement
Indirect costs are normally charged to Federal awards by the use of an indirect cost rate
Include signed agreement with contracts
If you are requesting indirect costs from the funding agency you must now attach the signed version of your Federally Approved Indirect Cost Rate Agreement
The negotiated rates must be accepted by all Federal awarding agencies.
Discuss Approved Rate Agreement
What is our rate?

12. Submitting a Grant application with indirect costs
NOFO must disclose
Funding Restrictions – Notices if there are any limits on indirect costs (or facilities and administrative costs).
Submit copy of signed IDC Rate Agreement
Required. Notices must include information on funding restrictions in order to allow an applicant to develop an application and budget consistent with program requirements.

13. How Do You Compute Indirect Costs for a project/program?
Amount of Grant X Federally approved Indirect Cost Rate = Indirect Costs
WRONG!

14. How Do You Compute Indirect Costs for a project/program?
Modified Total Direct Costs (MTDC) X Federally approved Indirect Cost Rate = Indirect Costs
Indirect Costs are not calculated on the total program budget.
They must be calculated by using the Modified Total Direct Cost X Indirect Rate

15. §200.68 Modified Total Direct Cost (MTDC)
MTDC includes all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each sub award

16. Exclusions
MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000.

17. What’s Included in MTDC ?
Included in MTDC Calculation
Excluded from MTDC Calculation
Salaries and Wages
Equipment
Fringe Benefits
Capital Expenditures
Materials and Supplies
Tuition Remission
Services
Rental Costs
The portion of each subaward up to $25,000
The portion of each subaward in excess of $25,000
Travel
Scholarships and Fellowships
Participant Support Costs

18. §200.331(4) Requirements for pass-through entities (Subrecipients)
An approved federally recognized indirect cost rate negotiated between the subrecipients and the Federal Government or, if no such rate exists, either a rate negotiated between the pass- through entity and the subrecipient (in compliance with this part), or a de minimis indirect cost rate
We must honor the indirect cost rates from each subawardee, if requested.

19. De minimis Indirect Cost Rate
10%

20. Either their approved rate or de minimis rate MUST be honored*
*Only if they ask
The Feds don’t pay recipients IDC unless they include it in their budgets (ask)
The Awardee does not have to include IDC in subaward budgets.

21. Can you collect Indirect Costs on Matching/Cost Share Funds?
The definitive answer?
It depends

22. Unrecovered Indirect Costs
Unrecovered indirect costs, including indirect costs on cost sharing or matching, may be included as part of cost sharing or matching with the prior approval of the Federal awarding agency.

23. QUESTIONS?