All Non-LEA's must submit an indirect cost application to DESE each year to recover indirect costs on a grant award from DESE. The Non-LEA application process is documented below. The Department of Elementary and Secondary Education (DESE) Audit & Compliance Unit negotiates and approves restricted indirect cost rate applications submitted by Non-LEA Grant Recipients that receive a grant from DESE. If your organization receives a Federal Award directly from a Federal awarding agency you must negotiate both an unrestricted and restricted indirect cost rate with them. Applications from new grantees of DESE must be submitted within the first 3 months of the grant start date. All other Non-LEA's that have had an approved indirect cost rate previously with DESE must submit an application by June 30, 2025, to recover indirect costs on your FY25 DESE grant.
Indirect costs are those organizational wide costs not readily identified with a specific project or organizational activity but incurred for the joint benefit of projects and other activities.
There are two types of indirect cost rates: unrestricted and restricted.
Unrestricted indirect cost rates include all organization wide indirect costs and are applied to grants that do not have the "supplement not supplant" statutory requirement. These grants are referred to as unrestricted grants.
Restricted indirect cost rates are applied to grants that have the "supplement not supplant" statutory requirement. The majority of DESE grants have this statutory requirement which prohibits the use of DESE grant funds supplanting local and state funds. These grants are referred to as "restricted rate" grants because grantees must use a specific "restricted rate formula" to determine what indirect cost rate may be used for reimbursement of indirect costs. The formula essentially "restricts" what the grantee may allocate to the indirect cost pool.
To determine the restricted rate, the indirect costs that are considered "supplanting" type costs must be reclassified to the total direct cost base. Examples of these "supplanting" type costs are indirect costs such as executive leadership, rent, depreciation, and indirect costs that are not organization wide. This results in a much lower rate for the recovery of indirect costs. The intention of restricted rate grants is that the funds be used to improve existing programs by providing supplemental funds for the betterment of the program instructional services provided and not to supplant state and local funds used for the non-instructional operation costs of the organization. (FY2025 IDC Attachment A )
For Non-LEA's that do not have an approved negotiated restricted indirect cost rate from a Federal cognizant agency, DESE has been granted authority to negotiate your annual restricted indirect cost rates to be applied to grants issued by DESE. For Cities and towns, DESE will assign the same rate as their Local Educational Agency if a Federal Negotiated Indirect Cost Rate Agreement is not provided.
The restricted indirect cost rate allowed for all grants issued by the Massachusetts Department of Elementary and Secondary Education is your federal negotiated restricted rate negotiated with a federal cognizant agency. The federal negotiated rate agreement can only be attained by organizations that receive direct Federal funding. The federal regulations for restricted indirect cost rates can be found in the Education Department General Administrative Regulations eCFR :: 34 CFR Part 76 Subpart F - Indirect Cost Rates. If your federal negotiated indirect cost rate agreement does not have a negotiated restricted rate, the maximum rate allowed will be the lesser of 8% or your negotiated un-restricted rate, whichever is lower.
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 Charter Schools. These rates are determined by DESE School Finance and the DESE Charter School Unit.
All Non-LEA Grant Recipients that have a separately, approved, negotiated rate with the Federal Government must submit to DESE's Audit and Compliance Unit:
These documents must be emailed to audit.compliance@mass.gov . Please make sure the subject line in the email states "FY25 ICR Application".
As stated above, the maximum restricted indirect cost rate allowed for grants issued by the Massachusetts Department of Elementary and Secondary Education is 8% or your federal negotiated restricted rate. 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 state agency or funding sources.
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 submit to DESE's Audit and Compliance Unit:
These documents must be emailed to the Department of Elementary and Secondary Education, Audit & Compliance at audit.compliance@mass.gov . Please indicate FY25 ICR Application in Subject line.
Expenditure data contained on the IRS Form 990 will be used to determine your organizations restricted indirect cost rate. The form is approved by the US Department of Education and may be used in light of submitting a Restricted Indirect Rate Proposal. Please be advised that 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.
The approved restricted 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 and the approved rates will be posted on the DESE website, which will be updated weekly. You may not recover any indirect costs on your grant without an approved rate from the DESE Audit and Compliance Unit. If you have any questions, please contact Jeffrey Benbenek at 781-338-6518 or email Jeffrey.benbenek@mass.gov .
Last Updated: June 18, 2024
Massachusetts Department of Elementary and Secondary Education 135 Santilli Highway, Everett, MA 02149
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