Grants and Other Financial Assistance Programs

Non-LEA's Annual Application for Indirect Cost Rates — FY 2020

To:	Non-LEA Grant Recipients (Cities and Towns, Non Profits, State Agencies and Institutions of Higher Learning)
Date:	May 22, 2019

Indirect costs represent the expenses of doing business that are not readily identified with a particular grant, contract or activity, but are necessary for the general operation of the organization. Indirect costs include organization wide such items as human resources, accounting, purchasing and other general administrative expenditures. In many cases some of these costs could be directly charged to a particular grant or activity but this would require complex allocation methods supported by documentation such as square footage, detailed time and attendance records by program, copy usage, phone usage etc. An indirect cost rate is a simplified method used to determine the amount of indirect costs that can be recovered from each grant. Any expenses included in the indirect cost rate, must be allowable expenses and cannot be directly charged to a grant.

The maximum restricted indirect cost rate allowed for grants issued by the Massachusetts Department of Elementary and Secondary Education is 8%**. Indirect costs are part of your total administrative costs. If your grant has an administrative expense restriction, you must include the indirect cost expenses recovered by the grant as part of that limitation.

The Massachusetts Department of Elementary and Secondary Education has been granted authority to assign annual restricted indirect cost rates to be applied to grants issued by the Department. This authority has been delegated by the U.S. Department of Education. This procedure is for all entities except Local Educational Agencies (LEAs) and other municipalities. Cities and towns will be assigned the same rate as their Local Educational Agency. The procedures for LEAs are based on their annual End of Year Report.

For Non-LEA Grant Recipients the application process is as follows:

Non-LEA with Approved Federal Rate

All Non-LEA Grant Recipients that have a separately, approved, negotiated rate with the Federal Government must send a copy of its current Federal Cognizant Agency Approved Negotiated Indirect Cost Rate Agreement, current Organizational Chart and a completed FY 20 Non-LEA Fixed Restricted Indirect Cost Rate Application (Attachment A*) to Commonwealth of Massachusetts, Department of Elementary and Secondary Education, Audit and Compliance Unit, 75 Pleasant Street, Malden, MA. 02148. The maximum restricted indirect cost rate allowed for grants issued by the Massachusetts Department of Elementary and Secondary Education is 8%**. This rate may then be adjusted downward by the Department based on specific requirements of the grant(s) being applied for. An adjusted rate will only be deemed appropriate for grants issued by the Department and should not be construed as an adjusted rate for grants from any other funding sources.

Non-LEA without an Approved Federal Rate

All Non LEA Grant Recipients that intend to recover indirect costs and do not have a separately, approved, negotiated rate with the Federal Government must send a copy of their most recently filed IRS Form 990, current Organizational Chart and a completed FY 20 Non-LEA Fixed Restricted Indirect Cost Rate Application (Attachment A*) to Commonwealth of Massachusetts, Department of Elementary and Secondary Education, Audit & Compliance Unit, 75 Pleasant Street, Malden, MA. 02148. Expenditure data contained on the IRS Form 990 will be used to determine your organizations eligibility towards the 8%** maximum rate. Additional information may be required. This rate may then be adjusted downward by the Department based on specific requirements of the grant(s) being applied for. An adjusted rate will only be deemed appropriate for grants issued by the Department and should not be construed as an adjusted rate for grants from any other funding sources.

These indirect cost rates will apply to both state and federal funding and are subject to an annual application process and review by the Massachusetts Department of Elementary and Secondary Education. A separate application will be published and required each year. The Audit & Compliance Unit will review the application and notify you of your approved restricted rate; in addition, rates will be posted on the DESE website, which will be updated weekly. If you have any questions, please contact Jeffrey Benbenek at 781-338-6518.

Last Updated: May 31, 2019