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HomeMy WebLinkAbout2023 Indirect Cost Allocation Narrative Kittitas County Public Health Department Simplified Indirect Cost Allocation Plan For the Year Ended December 31, 2021 NARRATIVE In order for the Kittitas County Public Health Department (KCPHD) to comply with federal regulations in the Uniform Grant Guidance, a simplified Indirect Cost Allocation Plan is adopted to be able to bill indirect costs to grants. KCPHD’s financial data from 2021 is used to formulate the 2023 Indirect Cost Allocation Plan. The distribution base on which the indirect rate will be allocated is the direct salaries charged to department’s programs. The department’s costs are divided into two categories: administration costs and direct program costs. Within the category of administration costs, only expenses incurred for common or joint purposes and in support of all programs are considered indirect costs. The costs coded to individual programs are considered direct costs. DEFINITIONS • All Other Direct Costs – the amount remaining from total costs less unallowable costs, indirect costs, and direct salaries. • Direct Costs – costs that can be identified specifically with a particular final cost objective such as a particular award, project, service or other direct activity of an organization. • Direct Cost Base – the 2021 fiscal year salaries for each program within the public health department. • Exclusions – costs that are passed through or sub-granted to others are considered to be excludable costs. Some salaries that were charged to administration are not included in the indirect costs. Also, the portion of the department’s supplies and services and charges expenses that were determined to not be directly associated with administration duties were excluded. • Indirect Cost Allocation Plan – the documentation identifying, accumulating, and developing rates based on the allowable costs of the public health administrative division. These costs may be allocated to the individual programs and billed to the program grants. • Indirect Cost Rate – a device for determining in a reasonable manner the proportion of indirect costs each program should bear. It is the ratio of the indirect costs to a direct cost base. • Indirect Costs – those costs incurred for a common objective that benefits more than one grant program or project. Such costs are not readily assignable to the cost objective specifically benefitted. • Uniform Grant Guidance – United States Office of Management & Budget document establishing principles and standards for determining costs for Federal awards carried out through grants, cost reimbursement contracts, and other agreements with governmental units. • Total Costs – the 2021 fiscal year financial data. • Unallowable Costs – certain costs specifically unallowable under the general and special award conditions or agency instructions. These costs are defined by the Uniform Grant Guidance. INDIRECT FUNCTIONS At KCPHD, the indirect functions are those administrative tasks completed and the costs incurred to support all divisions of the department. Administration division costs for the fiscal year 2021 totaled $605,078.90. Some of the costs included in this total are: the salaries for administrative staff time; the purchase of office supplies, operating supplies, minor office equipment; fees for professional services, telephone service, postage, travel, advertising, and other such expenses that are necessary to support the multiple programs within the department. Salary and benefit costs were excluded from the calculation that were charged to the administration program code because these are costs associated with other employees not included in the indirect cost rate calculation; this is mostly due to paid time off or general admin costs for the two permit technicians. Costs were also excluded from the calculation based on the assumption that only 11.11 percent of the total costs charged to the division for supplies, and services and charges would be used by the positions supported by the indirect rate. This percentage was found by dividing the total number of actual FTE for 2021 by the number of FTE supported by the indirect rate. Excludable costs included in the Administrative division’s totals included: Salaries $48,326.02 Benefits $8,420.51 Supplies $600.80 Services and Charges $1764.64 Total Excludable Costs $59,111.97 Unallowable costs included in the Administrative division’s total include capital lease expenditures and central services billings from the county. Unallowable costs included in the Administrative division’s totals included: Capital Leases and Outlay $2,274.36 Central Services Billings $162,421.55 Total Unallowable Costs $164,695.91 A summary of the department’s indirect costs are as follows: Total Administrative Division Costs $605,078.90 Less: Total Excludable Costs ($59,111.97) Less: Total Unallowable Costs ($164,695.91) Total Indirect Costs $381,271.02 DIVISIONS WITH DIRECT EXPENSES In 2021, KCPHD had 35 active programs with total expenditures of $2,370,853.92. Of that amount, $13,258.00 was related to excludable costs, which were passed through to Community Health of Central Washington for their professional services in the Children and Youth with Special Health Care Needs program. Direct costs included $1,209,017.61 related to salaries. The final $1,148,578.31 was considered to be allowable direct costs. These allowable costs include, but are not limited to: • Operating supplies that were necessary to meet the deliverables of the contracts; • Professional services as prescribed by OMB Uniform Grant Guidance, page 110, §200.459. These services were provided by individuals that possess skills not available within the department and the services were necessary to carry out the scope of the contract; • Food that was purchased for a meeting or conference where the primary purpose is the dissemination of technical information (OMB Uniform Grant Guidance, §200.432); • Advertising communicating specific activities or accomplishments as part of the outreach effort for grant deliverables (OMB Uniform Grant Guidance, §200.421); • Equipment purchases that did not meet the county’s threshold of a $5,000 minimum to be considered capital equipment. RATE RECOMMENDATION In order to account for a margin of error in the calculation of the department’s indirect cost rate, it is recommended by the department’s Fiscal Analyst to adopt a rate of 21%. This recommendation would keep the same rate as the 2022 rate indirect rate.