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Kittitas County Auditor - Agenda Staff Report <br />Prepared by: Brian Carlson, Budget and Finance Director <br />Agenda Date: May 3, 2022 <br />Topic: 2022 Indirect Cost Allocation Plan <br /> <br />Action Requested: <br />Approve Resolution adopting the 2022 Central Services Indirect Cost Allocation Plan <br /> <br />Summary: <br />• Pursuant to Federal regulations, and as a recipient of Federal grant awards, the County must annually <br />prepare and adopt an indirect cost allocation plan. <br />• This agenda item consists of a Resolution to authorize the plan for 2022. <br /> <br />Background: <br />• Indirect Cost Allocation refers to the cost of certain county departments to provide services to other <br />County Departments. This enables a quantifiable, reasonable and consistent way to offset the County’s <br />costs to administer grants. <br />• Indirect Cost Allocation is also applicable to certain County contracts, and for internal accounting and <br />budgeting, e.g. Departments and/or Funds pay one another for the provision of services. <br />• A cost allocation plan is required for most Fed grant recipients. A plan’s threshold requirements are <br />established by the Federal Office of Management and Budget. <br />• The rate calculation is formula-driven, and uses the most-recent audited financial data. Therefore, there <br />is commonly a two-year lag for implementation of a given rate. E.g. 2020 data is used to establish a rate <br />for operations in 2022. <br />• The rate calculation is forwarded to the County Auditor, who then commonly applies a margin of error <br />to arrive at a final “certified” rate. The Certified rate is forwarded to BOCC for review/approval. <br />• The current plan and recent history are shown below: <br />Effective Year 2019 2020 2021 2022 <br />Actual Rate 13.01%14.44%13.36%16.89% <br />Adopted Rate 12.75%12.75%12.75%15.00% <br />Variance 0.26%1.69%0.61%1.89% <br /> <br />• The 2022 “actual” rate increase is driven by likely one-time expense increases in 2020, primarily in the IT <br />Department. <br />• Additional plan information and calculations are contained in the attached 2022 Indirect Cost Allocation <br />Plan <br />• Attachments (2): <br />o Resolution 2022 Indirect Cost Allocation <br />o 2022 Indirect Cost Allocation Plan