Indirect Costs


What are indirect Costs?

Indirect Costs (IC)" or "Facilities and Administrative Costs (F&A) " represent the expenses of doing business that are not readily identified with a particular grant, contract, project function or activity, but are necessary for the general operation of the organization and the conduct of activities it performs.  Indirect costs are expenditures related to fiscal operations, human resources, maintenance of plant services and other general administrative and business support offices.

Organization-wide general operation indirect costs are departmental level expenditures related to the direction and control all grantees have in common. Activities such as: accounting, payroll, and personnel management as examples of organizational disciplines.

Educational activities such as Curriculum Development, Pupil Data, Library Services, Evaluation Services, and School Services are mistaken for indirect cost functions. These activities are not for the general direction and control of the organization, but rather provide services to schools or students.

Indirect cost recovery is not additional grant funds but represents an amount that is a part of an approved program allocation.

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State Grants

If permissible in the state budget line item, indirect cost rates (ICR) for state grants are set by the program offices and therefore do not require submission of a proposal. 

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Federal Grants

According to 2 CFR §200.414 and Appendix VII to Part 200, indirect cost rates help compensate the treasurer, business manager, human resources officer and offices of operation and plant maintenance services for costs associated with applicable federal projects, for example, payroll, purchase orders and personnel. Districts calculate the indirect rate when completing their indirect cost rate proposals. The rate is the ratio of total, allowable indirect costs to modified total direct costs (less excluded costs).

The Department’s indirect cost rate methodology must be approved by the U.S. Department of Education. The regulation stipulates that entities that utilize an indirect cost rate on a federal grant must apply the rate to modified total direct costs.

The modified total direct costs, as defined in 2 CFR §200.1, include all direct salaries and wages, applicable fringe benefits, materials and supplies, services and travel under the award and up to the first $25,000 of each subaward, regardless of the performance periods of these subawards. Modified total direct costs exclude equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward more than $25,000. Other items may be excluded only when it is necessary to avoid a serious inequity in the distribution of indirect costs—and with the approval of the cognizant agency for indirect costs. State grant budgets also use the modified total direct costs basis.

If you would like to apply for a rate, please use the links below to fill out an Indirect Cost Rate (ICR) Workbook.  Direct any questions you may have to indirect cost@education.ohio.gov.

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Rate Types

  • Restricted rates are established for use on federal programs that prohibit supplanting, where funding is intended to "supplement and not supplant" other State or local funding. The restricted rate filters out costs that would be incurred by the agency whether or not any particular grant program was in operation. (34 CFR 75.563).
Restricted indirect cost rate - formula - § 76.564 (c) if a grant is subject to using a restricted indirect cost rate, and the grantee is not a state or local government agency, they can use an indirect cost rate of 8% unless it is determined a lower rate applies. (Examples include:  Universities, Non-profit agencies, Community Service Organizations.)
  • Unrestricted rates are used on federal programs that do not have the supplanting requirement.  The unrestricted rate is used with programs such as school food service and may also be used by local agencies on certain direct-funded federal programs.   
  • De-Minimis rates (Not available for State or Local Governments (2 CFR 200.414(f))

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Indirect Cost Rate Application Materials

Fiscal Year 2023

FY23 ICR Instructions
FY23 ICR Workbook

FISCAL YEAR 2020-2022

FY22 ICR Instructions
FY22 ICR Workbook 
FY21 ICR Instructions
FY21 ICR Workbook
FY20 ICR Instructions
FY20 ICR Workbook

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Budget/Expenditure Instructions

Applying the Approved ICR to the Budget
ICR Calculation Worksheet

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Approved Indirect Cost Rates

Last Modified: 10/18/2022 2:07:03 PM