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Advisory and Program search result
Directive:

DINAP BULLETIN 87-23


Status: Cancelled

Subject:
General Information on the Establishment of Indirect Cost Rates and Cost Allocation Plans

Purpose:
To provide grantees with a clarification of requirements in DINAP Bulletin 84-51 which cover indirect costs, indirect cost rates, and cost allocation plans, contained in the Native American Job Training Partnership Act (JTPA) program regulations and in OM

To

All Native American JTPA Grantees

From

HERBERT FELLMAN PAUL A. MAYRAND Chief Director Division of Indian and Native Office of Special Targeted American Programs Programs

Date

January 26, 1988

Expiration Date

Continuing.

Rescissions:    DINAP Bulletin 84-51.
Text :
References. 20 CFR 632.37(b), OMB Circular A-87 and A-122. Background. The JTPA regulations at 20 CFR 632.37(b), and the Federal cost principles contained in OMB Circulars A-87 and A-122 state that all costs charged to a grant, whether indirect or direct, to be allowable, must be necessary, reasonable and allocable to the grant. Some examples of possible indirect costs are: rent, telephone, office equipment and supplies, utilities and printing. Almost all grantees have more than one funding source and in most cases the indirect costs are spread among all of them. It is unlikely that any grantee would have only its JTPA grant, or that a grantee with more than one funding source would not spread the indirect costs among all the benefitting grants. In all cases where a grantee has more than one source of funds and spreads the indirect costs among them it must have either an indirect cost proposal or a cost allocation plan approved by its cognizant Federal agency. This requirement is stated for federally recognized tribes in OMB Circular A-87 in Attachment A, Section J, and for non-profit organizations in OMB Circular A-122 in Section E. Grantees should contact their nearest Department of Health and Human Services regional office to obtain copies of OASMB-5, "A Guide for Nonprofit Organizations" and OASC-10, "A Guide for State and Local Government Agencies" (applicable to tribes); these documents provide guidelines for the preparation of indirect cost rate proposals and cost allocation plans. Definitions. For purposes of this directive the definitions contained in OMB Circular A-87 and A-122 will govern. Policy. If the grantee intends to charge its JTPA Section 401 grant for indirect costs, a cost allocation plan or an indirect cost proposal is required. A cost allocation plan or indirect cost proposal and the methodology used in their computation must be negotiated with and approved by the cognizant Federal agency annually. The portion of the salaries and expenses of the chief executive and the executive staff of a Federally recognized Indian tribal government that is attributable to managing and operating the JTPA program is allowable and can be included among the indirect costs. The allowable portion of the salary and expenses of the chief executive and staff will be determined on a reasonable basis. These and all other costs covered by a cost allocation plan or an indirect cost proposal must be identifiable and are subject to audit. In all instances where indirect costs are administrative, they will be charged to the administrative cost category. Because Section 632.263 of the JTPA regulations limits administrative costs to 20 percent of the amount allocated to the grantee, a combination of direct and indirect administrative costs cannot exceed the 20 percent limitation. If the total of direct and indirect administrative costs exceeds 20 percent, the difference must be paid from non-JTPA funds. Grantees' funding levels are not increased as the result of an approved indirect cost proposal or cost allocation plan. The Negotiation Process. When a grantee is the recipient of other Federal, State and/or local funds, and wishes to charge the JTPA program for indirect costs, it is required to establish a cost allocation plan or an indirect cost proposal. The cost allocation plan or indirect cost rate proposal will be approved by the grantee's cognizant Federal agency. The cognizant Federal agency is usually the agency which provides the largest sum of money to the grantee. The Division of Cost Determination (DCD) of the Department of Labor (DOL), is available to provide technical assistance when requested. In addition, DCD will negotiate an indirect cost rate for those grantees for which DOL is the cognizant Federal agency. Summary. The negotiation of a cost allocation plan or an indirect cost rate is based on the regulations and instructions cited throughout this directive. The rate established by the Federal cognizant agency will generally be accepted by DOL. The total of direct administrative and indirect administrative costs that can be charged to the JTPA grant cannot exceed twenty (20) percent of the total amount of the grant. A cost allocation plan or an indirect cost proposal and the methodology used in its development must be approved annually by the cognizant agency. The proposal and supporting data and all costs claimed, both direct and indirect, are subject to audit. During monitoring visits, the DINAP Federal Representative will verify that services reimbursed through application of the indirect cost rate are actually being provided. If any questions arise concerning the negotiated indirect cost, rate and how it should be applied to a JTPA Section 401 grant, DCD should be contacted. See attached listing of DCD contacts. Action Required. A grantee that does not have an approved cost allocation plan or indirect cost rate, but requires one, should contact its cognizant Federal agency. Grantees who already have approved indirect cost rates should obtain renewals in accordance with this bulletin and the applicable OMB Circulars, and they should start the renewal process as soon as possible after being advised of their new funding level when an indirect cost rate is approved for a grantee, the type of rate and the rate itself is to be reported in the comment section of all the financial status reports submitted by the grantee to DINAP. In those cases where DOL is the cognizant agency, a new grantee should submit an indirect cost proposal or cost allocation plan to a DOL regional office (see attachment) for review and approval within 90 days after it has been designated a JTPA grantee. Existing JTPA grantees for whom DOL is the cognizant agency should apply for a renewal within six months after completion of any grantee Fiscal Year. Please note the reference to "grantee Fiscal Year," which may or may not correspond to the Federal Government's Fiscal Year. Inquiries. Questions should be directed to your DINAP Federal Representative.

Attachments :
For a copy of the attachment, please contact Brenda Tollerson at (202) 219-8502.




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