Indirect Cost Certification Plan

  • An indirect cost rate is a means of determining, in a reasonable manner, the percentage of allowable general management costs that benefit each federal program or activity.  DDOE has, in cooperation with the U.S. Department of Education (USED), developed an indirect cost plan for the local educational agencies (LEAs) in Delaware.  DDOE has been delegated authority by USED to review and approve indirect cost rates submitted by LEAs.  In order to recover indirect costs on federal awards, an LEA must have an approved indirect cost rate.  A new indirect cost rate must be obtained every fiscal year beginning July 1.

    Indirect costs are generally administrative costs such as the salaries and expenses for staff engaged in organization-wide (general) activities. 

    Indirect costs are recovered only to the extent of direct costs incurred.  Once a rate is approved, it is applied to the net direct costs expended (i.e., total direct costs less equipment purchases, alterations and renovations, the portion of individual subawards exceeding $25,000, and pass-through funds).  The approved rate is the maximum rate that can be applied, although less than the maximum rate may be used.

    Federal law or grant conditions may limit the amount of indirect costs or the indirect cost rate.  Grant terms and conditions may also exist for some grants that prohibit any recovery of indirect costs.  Recovery of indirect costs on grants is subject to the availability of funds.  To recover indirect costs, the LEA applies the indirect cost rate in effect for the given fiscal year to the grant expenditures during that fiscal year.  Indirect cost rates approved for a given fiscal year apply to all disbursements made within that fiscal year that are eligible for earning indirect costs, including any disbursements made on project balances that are brought forward.