NON-FEDERAL RECOVERIES – COST RECOVERY - 9217

(Renumbered: 01/2022)

(Revised and renumbered from 8756.2)

Agencies/departments which receive reimbursements from any source other than federal funding sources will also ensure that full costs are included in charges for goods provided and services performed. The basic principles and cost elements included are the same as for Federal ICRPs (see SAM section 9217.2) with one exception; non-federal cost recoveries will include the larger of the agency’s/department's central service costs, Statewide Cost Allocation Plan (SWCAP) or Pro Rata. See below for a sample indirect cost calculation.

RECOVERY OF INDIRECT COSTS

SAMPLE CALCULATION

Department ABC administers a program, grant, or contract and is preparing to bill for services rendered.

1. Department ABC develops an Indirect Cost Rate Proposal (ICRP) with a 32 percent indirect cost rate as follows:

• Total department indirect (a) = $2,660,000
• Central service allocation (b) = $140,000
• Total direct cost base (direct personal services costs) (c) = $8,750,000

• ICRP = (a+b)/c = ($2,660,000 + $140,000) / $8,750,000

= $2,800,000 / $8,750,000

= 32%

2. The indirect cost rate applicable to central service costs is:

• Central service allocation (b) / Total direct cost base (direct personal services cost (c)

• = $140,000 / $8,750,000  = 1.6%

3. Assume total direct costs incurred for Department ABC’s reimbursable activity during the billing period to be $350,000, of which $250,000 is for direct personal services costs and $100,000 is for other direct operating costs.

4. Billable amount for period   =  direct costs + indirect costs

• =    ($250,000 + $100,000) + (32% x $250,000)

=    $350,000 + $80,000

=    $430,000

     5a. Expected central service recovery  =  central service indirect cost rate x direct  cost base:

• =    1.6%  x  $250,000

=    $4,000

-or-

     5b. Expected central service recovery  =  (Department ABC’s central service allocation / Total

      department direct cost) x Indirect costs

• =         {$140,000/($2,660,000 + $140,000)} x $80,000

=          ($140,000 / $2,800,000) x  $80,000

=          0.05 x $80,000

=          $4,000

Summary:

Department ABC would collect a total of $430,000 for its reimbursement activity, $4,000 of which is attributable to central service costs.

(a)  For federal funded programs, use SWCAP

   (b) For non-federal funded programs, use Pro Rata or SWCAP (whichever is greater)

Total direct salaries and wages, total direct costs, or some other appropriate base could be substituted as the base in developing the indirect cost rate.