11/20/15: ODE Indirect Cost Rate

As Ohio school districts try to maximize their Medicaid School Program reimbursement and other federal grant revenue, make sure that you are applying for an ODE Indirect Cost Rate. The Indirect Cost Recovery Proposal (ICRP) can be completed by your district or by your billing vendor. Historically, obtaining an ODE Indirect Cost Rate will increase your overall MSP reimbursement by 15-20 percent.

What is the Indirect Cost Rate?
The Indirect Cost Rate (ICR) allows districts to recover a portion of “fiscal costs associated with the Treasurer and Human Resources departments.” An Indirect Cost Rate (ICR) percentage is calculated based on a financial report that is filed annually with the Ohio Department of Education. This report will generate two rates: a Restricted Rate and an Unrestricted Rate.

Utilization of Indirect Cost Rates
The restricted indirect cost rate can be used for federal grants with supplement not supplant requirements. The unrestricted indirect cost rate can be used on the MSP Cost Report to generate additional reimbursement based on MSP district employed therapists’ costs, which results in additional reimbursement on the MSP Final Settlement.

Medicaid School Cost Report (Exhibit 5a)
Summary of Cost—Direct Medical Services
Allocation %15%
Job CategoryTotal Salary
Indirect Cost Rate
Pool 1$125,000$18,750
Total Personnel$125,000$18,750

Who Can Submit an ICRP?
Any district is able to submit an indirect cost rate proposal, as any district can use the restricted rate for federal grants with supplement not supplant requirements; however, only districts with district employed therapists will benefit from the unrestricted rate.

Recent Changes

  • The Restricted Rate Subsidiary Schedule is intended to calculate the restricted rate based on adjustments to the unrestricted rate. Some costs that are considered indirect for the unrestricted rate are moved from the indirect cost pool to the direct cost pool for the direct rate.
  • The Schedule of Subcontracts/Sub-awards for each Department is intended to show ALL major subcontracts/sub-awards within a district by Function Number and Object code. Major sub-awards are generally those that exceed $25,000 in expenditures per year. This schedule is designed to automatically calculate the first $25,000 of each subcontract/sub-award as well as the disallowed portion.
  • Schedule B- Unallowed and Excluded Costs should be familiar as it was part of the previous ICRPs. However, all Functions (1100 – 7900) are included rather than 1100 – 4600 as before, and is now by function rather than object. Additionally, it includes Object 446, Other Internal Service Fund Costs, Subcontract payments greater than $25,000, Cost for Central Services, Bad Debts, Fines and Penalties, Contingencies and Entertainment Contributions to other Organizations.
  • Lastly, the workbook now includes a Schedule of Paid Leave by Department. This schedule is to identify payments to separating employees for unused leave and whether an employee was a direct or indirect employee in calculating both the restricted and unrestricted rates.

When is the ICRP due?
No deadline has been announced for the Indirect Cost Rate Proposal, although, it would be recommended to have them submitted before March or April to allow time to make revisions should ODE find errors in their review before the end of the school year.This is a complicated report to complete, and I strongly suggest that you have your billing vendor complete this report for you. Should you decide to prepare this on your own, below is a link to ODE’s webpage with all the information associated with the Indirect Cost Rate Proposal, including instructions for completing the workbook, the workbook itself, sample reports, and even helpful tips for completing the proposal. http://education.ohio.gov/Topics/Finance-and-Funding/Grants/Indirect-Recovery-Costs