No. 35345 (Amendment): Rule R277-424. Indirect Costs for State Programs

(Amendment)

DAR File No.: 35345
Filed: 10/13/2011 03:12:55 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is amended to provide updated definitions and standards for claiming indirect costs for state programs and to provide that indirect costs will not be paid to higher education institutions under some programs.

Summary of the rule or change:

The changes include updating definitions and standards and providing more specific criteria for Utah State Office of Education/Utah State Board of Education/local education agency (LEA) payment of indirect costs.

State statutory or constitutional authorization for this rule:

• Subsection 53A-1-401(3)
• Subsection 53A-1-402(1)(e)

Anticipated cost or savings to:

the state budget:

Indirect costs payments will be managed within current appropriations from the state budget.

local governments:

Local entities may save some local funds received within grants if they charge grant participants indirect costs. Costs are uncertain due to local decision-making.

small businesses:

There are no anticipated costs or savings to small businesses. This rule applies to public education and does not affect businesses.

persons other than small businesses, businesses, or local governmental entities:

There are no anticipated costs or savings to persons other than small businesses, businesses, or local government entities. Indirect costs are payments between government entities.

Compliance costs for affected persons:

There are no compliance costs for affected persons. Indirect costs are payments between government entities.

Comments by the department head on the fiscal impact the rule may have on businesses:

I have reviewed this rule and I see no fiscal impact on businesses.

Larry K. Shumway, State Superintendent

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Education
Administration
250 E 500 S
SALT LAKE CITY, UT 84111-3272

Direct questions regarding this rule to:

• Carol Lear at the above address, by phone at 801-538-7835, by FAX at 801-538-7768, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

12/01/2011

This rule may become effective on:

12/08/2011

Authorized by:

Carol Lear, Director, School Law and Legislation

RULE TEXT

R277. Education, Administration.

R277-424. Indirect Costs for State Programs.

R277-424-1. Definitions.

[G]A. "Board" means the Utah State Board of Education.

[C]B. "Direct costs" means costs which can be easily, obviously, and conveniently identified by the Utah State Office of Education with a specific program.

[B]C. "Indirect costs" means the costs of providing indirect services. Restricted and non-restricted indirect costs are defined in R277-425, "Budgeting, Accounting and Auditing Handbook for Utah School Districts."

[A]D. "Indirect Services" means services which cannot be identified with a specific program.[ All support services programs are indirect services of instruction programs.]

E. "LEA" means a local education agency which includes school districts and charter schools.

[E]F. "Non-restricted indirect cost rate" means a rate assigned to each [school district]LEA annually, based on the ratio of non-restricted indirect costs to direct costs as reported in the annual financial report for the specific [district]LEA.

[D]G. "Restricted indirect cost rate" means a rate assigned to each [school district]LEA annually based on the ratio of restricted indirect costs to direct costs as reported in the annual financial report for the specific [district]LEA.

[F]H. "Unallowable costs" means expenditures directly attributable to governance. Governance includes salaries and expenditures of the office of the superintendent, the governing board, election expenses, and expenditures for fringe benefits which are associated with unallowable salary expenditures.

 

R277-424-2. Authority and Purpose.

A. This rule is authorized by Article X, Section 3 of the Utah Constitution which vests general control and supervision of public education in the Board, Section 53A-1-402(1)([f]e)[, U.C.A. 1953,] which directs the Board to adopt rules for financial , statistical, and student accounting requirements, and Section 53A-1-401(3)[, U.C.A. 1953,] which allows the Board to adopt rules in accordance with its responsibilities.

B. The purpose of this rule is to establish Board standards for claiming indirect costs for state programs.

 

R277-424-3. Standards.

A(1) [If the state funding for a program is very limited and the operation of the program in the school district does not create a significant burden of extra expenditures beyond the direct cost needs of the program, no indirect costs are charged against the program for indirect services.]LEAs may charge indirect costs to state funded programs.

(2) [If a program allocation is moderately large and its use of indirect services and the time necessary to run the program do not significantly affect the school district's financial operation of the program, a charge for indirect costs may be taken from the total state program allocation by the school district according to the school district restricted indirect cost rate.]The Board shall not authorize or pay indirect costs to higher education institutions for state funded contractual work.

[ (3) If a program allocation is very large and its use of indirect services and the time necessary to run the program significantly affect the school district's financial operation of the program, a charge for indirect costs may be taken from the total state program allocation by the school district according to the school district non-restricted indirect cost rate.

] B. Prior to the beginning of each fiscal year, the Utah State Office of Education publishes a schedule of the indirect cost rates for state programs. The schedule is developed from data gathered from the [a]Annual [Form F-4] Financial Reports submitted by the [school districts]LEAs. [The]Each program schedule shows [for each program] whether or not the restricted or non-restricted indirect cost rate applies [or]and whether or not indirect costs are [un]allowable or [not] applicable.

C. Recovery of indirect costs is subject to availability of funds. If a combination of direct and indirect costs exceeds funds available, then the [school district]LEA may not recover the total cost of the project or program. Recovery of indirect costs for state programs is optional for [school districts]LEAs.

D. Indirect costs for state programs may be recovered only to the extent that direct costs were incurred. The indirect cost rate is applied to the amount expended, not to the total grant, in order to determine the amount for indirect costs.

 

KEY: education finance

Date of Enactment or Last Substantive Amendment: [1987]2011

Notice of Continuation: October 5, 2007

Authorizing, and Implemented or Interpreted Law: Art X Sec 3; 53A-1-402(1)(f); 53A-1-401(3)

 

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