KCTCS has applied for and received its Federal indirect cost rate for the period July 1, 2011 through June 30, 2013. The current “on-campus” rate is 55% of direct salary and wage expenses. If KCTCS receives approval to apply this rate for a particular grant, the amount of cost would be calculated by multiplying 55% of the salary and wage expenses charged directly to the grant. It cannot be applied to other grant direct charges such as equipment, fringe benefits, travel, etc. The Office of Sponsored Projects Accounting is responsible for the application and negotiation necessary for obtaining the approved Federal indirect cost rate.
DHHS Indirect Cost Rate Agreement
Indirect Cost Recovery
The Federal Government recognizes that indirect costs associated with the management of Federal grants and contracts represent a significant cost to educational institutions. They therefore are willing to pay institutions indirect cost recovery funds to help offset these costs.
The amount of indirect cost recovery funds an institution is eligible to receive is determined on an award-by-award basis and is calculated in one of two ways. The amount is established by the Federal sponsor at the time of the grant award using a federally mandated rate or the institution applies its Federally approved indirect cost rate to certain direct costs of the grant. The institution typically does not have a choice with regards to which method is used as this is determined by the sponsoring agency when the grant/contract guidelines are established.
An additional use of a federally approved indirect cost rate is the possibility of its application toward the institutional matching requirements (cost sharing) of certain federally funded project/grants. In the award proposal and negotiation phases, an institution may be able to apply its rate to the award amount to partially or totally fulfill the required matching amount.
It is the responsibility of each KCTCS business unit to determine the amount of revenue they anticipate generating from their unit’s grant indirect cost and budget this amount to account string 0413-01-706110-06000-80037. These estimates can vary from year to year and from grant to grant. College business officers may recruit assistance from their grant administrators and managers in determining these revenue estimates. For estimating revenue amount on System-wide or multi business unit grants, an appropriate allocation of indirect cost revenue will be determined by the KCTCS Office of Sponsored Projects Administration for each participating business unit.
Starting on July 1, 2005 the KCTCS business unit which generated the revenue, receives the entire amount of revenue recorded as current operating revenue. The actual revenue account string is 44800-01-706110-06000-80037.
An indirect cost assessment rate is developed each fiscal year by the Office of Sponsored Projects Accounting (SPA) in an amount necessary to cover the costs (administration costs) of the Office of Sponsored Projects Administration, Office of Sponsored Projects Accounting, special System-wide grant initiatives, and other associated costs of managing sponsored projects. The rate is developed and communicated to the Colleges by April 30 of each year for the subsequent fiscal year, and shall be based on an estimate of that fiscal year’s administration cost and total KCTCS grant expenditures. The rate will be stated as a percentage and calculated by dividing the estimated administration costs by estimated total grant expenditures of the System. The rate will be applied to the actual grant expenses of each business unit and assessed as a current operating expense on a quarterly basis. The rate will be evaluated throughout the fiscal year by SPA to ensure it is in line with projected administration costs, with adjustments to the rate made as necessary. Rate adjustments will be communicated by SPA to College Business Offices on a timely basis.
Starting on July 1, 2013 KCTCS business units are assessed a percentage (1.75%) to cover costs of administering the grants. Although some grants do not allow indirect cost, the assessment is based on the expenses of all grants, excluding KY Wins and financial aid. Assessments are done quarterly based on the grant expenditures of each business unit, for that quarter. Like the revenue recovery budgets, the assessment expense budgets are entered into the budget module and uploaded as a part of the initial budget load. The expense account string is 01-706110-06000-80037 (70% to 0502 and 30% to 0508).
F & A Agreement