Office of Mgmt. & Budget
Federal and Other Non-State Funding and Central Support Indirect
and Administrative Costs
Directors of Administration and Chief Fiscal Officers
CONTACT: William G. Shannon
It is State policy
and the responsibility of each agency to maximize the
recovery of indirect cost and administrative cost from all Federal programs
including block grants and other non-State funded programs as well as
supported programs. Agencies must ensure that indirect costs are charged
recovered from block grant programs to the fullest extent allowable.
Department and agency
program staff who seek, negotiate, or administer Federal
and other non-State funded programs, including fee supported programs,
include allowance for indirect costs as part of the total program budget.
In all cases where
Federal and other non-State funded programs, including fee
supported programs exist, agencies shall prepare indirect cost rate proposals
or cost allocation plans by applying the concepts set forth in the Federal
Office of Management and Budget Circular A-87. The Office of Management
Budget will furnish departments with State central support service cost
allocations. To these costs, the departments will add their own department
indirect costs for the purpose of developing the rate. A copy of each
agency's indirect cost rate proposal is to be forwarded to the Director,
Office of Management and Budget, by May 1, immediately preceding the beginning
of the fiscal year in which the rate will be applied. In addition, agencies
that negotiate an indirect cost rate with a Federal cognizant agency shall
forward a copy of the approved Federal negotiation agreement to the Director,
Office of Management and Budget, within ten days of its receipt. Departments
or agencies which fail to furnish this information will not be eligible
receive any return of excess indirect costs, if, and when a distribution
Effective July 1,
1996, all existing waivers concerning the payment of
indirect cost recoveries are canceled. If a waiver is desired, a new request
must be submitted to the Assistant Director of Budget at the Office of
Management and Budget (OMB) for approval from the Director, Office of
Management and Budget. A waiver request must provide justification for
exemption, the dollar amount of the exemption and the funding source.
waivers will be for one fiscal year only.
Agencies are advised
that indirect cost may not be used as State "in-kind"
match where a program is financed partially from the State and partially
from Federal and other non-State fund sources including fees. Particular
attention should be given to year-end closing procedures to assure the
timely application of indirect cost revenue to the fiscal year anticipation.
Elizabeth L. Pugh