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DIRECT AND INDIRECT COST

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Direct costs are charged to the appropriate programs,while direct and indirect support charges aredistributed for support service programs to varioususer programs. These accounting proceduresprovide the means for assessing the fiscal impact ofoperating such programs. This section will cover thedifferences between the charges and methods ofaccounting for them.
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DIRECT AND INDIRECT COST

Direct costs are charged to the appropriate programs,
while direct and indirect support charges are
distributed for support service programs to various
user programs. These accounting procedures
provide the means for assessing the fiscal impact of
operating such programs. This section will cover the
differences between the charges and methods of
accounting for them.

An excellent reference is the California School
Accounting Manual. Procedures 320, 325, 910 and
915 cover direct, direct support, and indirect costs
accounting methods in detail.

The United States Department of Education (USDE)
has approved a cost allocation plan for California
which will govern the methodology for determining
restricted indirect cost rates for school districts and
County Offices of Education.


7.1
May 2008

Direct
Costs

Direct costs are expenses that can be separately identified and charged as part of the cost
of a product, service, or department. Typical direct costs include items such as
instructional and other program materials printed in the district print shop, fuel, oil and
repairs of district vehicles not used for home-to-school transportation, centralized data
processing services, in-house equipment repairs, and field trips.





Calculating Direct Costs

Direct costs can be calculated using different methods, which are described in the
accounting manual. An example is a charge to district administration for the printing of
workshop materials.





Intrafund Direct Costs

When direct costs are charged to programs within the same fund, account number 5710 is
used. The program receiving the service is charged (a debit entry) and the program
providing the service is credited. The total of all 5710 accounts must be a zero balance.

The following is a sample entry:


Fund
Res Goal Func Obj
DR
03-00
xxxx xxxx xxxx 5710-020
District Administration
CR
03-00
xxxx xxxx xxxx 5710-020
Print Shop



7.2
May 2008


Interfund Direct Costs

When direct costs are charged to the Child Nutrition, Child Development, or Adult
Education Funds, account number 5750 is used. The program receiving the service is
charged (a debit entry) and the program providing the service is credited. The total of all
5750 accounts must be a zero balance.

The following is a sample entry:

Fund Res Goal Func
Obj
DR 12-06 xxxx xxxx xxxx
5750-020
Child Development-Print Charges
CR 12-06 xxxx
9110
Cash

DR 03-00 xxxx 9110
Cash
CR 03-00 xxxx xxxx xxxx
5750-020
Print Shop




Direct Support Costs

Direct support costs are charges for a support program and services that directly benefit other
programs. These are costs identified in provider programs that can be transferred to user
programs during the year. Typical direct support costs are for supervision, utilities, and
psychological and nursing services.















7.3
May 2008

Intrafund Direct Support Costs

When direct support costs are charged to programs within the same fund, 5710 is used. The
program receiving the service is charged (a debit entry) and the program providing the service is
credited. The total of all 5710 accounts must net to a zero by function.

The following is a sample entry:


Fund
Obj
DR
03-00
5710-001
Special Education Assessment
CR
03-00
5710-005
Pupil Services Special Education Assessment




Interfund Direct Support Costs

When direct support costs are charged to the Cafeteria, Child Development or Adult Education
Funds, account numbers 5750 is used. The program receiving the service is charged (a debit
entry) and the program providing the service is credited. The total of all 5750 accounts must
net to zero by object and function.

The following is a sample entry:


Fund
Obj
DR
25-19
5750-100
Developer Fees – Administrative Expenses
CR
25-19
9110

Cash

DR
03-00
9110

Cash
CR
03-00
5750-100
General Fund – Administrative Expenses


7.4
Revised April 2009

Indirect Costs

Indirect costs are those costs that cannot be directly charged to a particular program, but are
attributed to services, which are necessary to operate the program. Such services include, but
are not limited to, accounting, budgeting, payroll preparation, personnel management,
purchasing, warehousing and centralized data processing. A multiyear list of indirect cost rates
is posted online annually at http://www.cde.ca.gov/fg/ac/ic which is used with federal and state
programs. Some programs cap the allowed indirect cost rates, others have an administrative
cap that limits a combination of direct administrative costs and indirect costs, while others do not
allow indirect costs at all, requiring that the entire award amount be spent on direct costs.




Calculating Indirect Costs

The amount of allowable indirect costs charged to a grant or entitlement program is determined
by actual expenditures during a fiscal year, not by the entitlement. To calculate the indirect
cost to be charged to a program, multiply the actual expenditures in objects 1000 – 5999 less
object 5100 by the allowable indirect cost rate.

The following are a few examples of indirect cost rate calculations:

Program Entitlement Expenditures
Indirect
Indirect
Cost
Rate
Cost

TITLE I
25,000
20,000
8%
1,600
TITLE VI
20,000
18,500
8%
1,480
EIA 10,100 10,000
3%
300


7.5
May 2008


Intrafund Indirect Costs

When indirect costs are charged to programs within the same fund, account number 7310 is
used. The program receiving the service is charged (a debit entry) and the program providing
the service is credited. The total of all 7310 accounts must be a zero balance.


Fund Res Goal Func Obj
DR
06-00 7394 1110 7210 7310
TIIBG
CR
03-00 0000 0000 7210 7310
GF




Interfund Indirect Costs

When indirect costs are charged to programs within the Child Nutrition, Child Development or
Adult Education Funds, fund account number 7350 is used. The program receiving the service
is charged (a debit entry) and the program providing the service is credited. The total of all
7350 accounts must be a zero balance.

The following is a sample entry:

Fund Res Goal Func Obj
DR 13-00 5310 0000 7210 7350 Food Services
CR 13-00 5310 9110 Cash

DR 03-00 0000 9110 Cash
CR 03-00 0000 0000 7210 7350 GF








7.6
May 2008

California Department of Education (http://www.cde.ca.gov/fg/ac/co/icrate0910letter.asp)
Page Generated: 5/1/2009 3:55:13 PM


April 27, 2009
Dear County Chief Business Officials:
2009-10 APPROVED INDIRECT COST RATES
As the cognizant agency authorized by the United States Department of Education to approve California kindergarten through
twelfth grade (K-12) local educational agency (LEA) indirect cost rates, the California Department of Education (CDE) has
reviewed the 2007-08 standardized account code structure (SACS) expenditure data and has finalized the approved indirect
cost rates. The rates are for use, as allowable, with 2009-10 federal and state programs.
Approved Indirect Cost Rates
Please share the enclosed listing with the school districts and joint powers agencies (JPAs) in your county. The indirect cost
rates will also be posted on our Web page at http://www.cde.ca.gov/fg/ac/ic/.
Indirect Cost Rates for JPAs
As a reminder, because JPAs do not generally meet the guidelines for receiving approved indirect cost rates, they are not
given an approved rate unless it is requested during the SACS data submission process. For further information on indirect
cost rates applicable to JPAs, including the guidelines that must be met to receive an indirect cost rate, see Procedure 805 of
the California School Accounting Manual.
Statewide Indirect Cost Rates
The 2009-10 statewide average indirect cost rates for the Food Service and Adult Education programs are as follows:
4.52% Food Service
4.42% Adult Education
For these programs, California Education Code sections 38101(c) and 52616.4(a)(3), respectively, limit school district indirect
costs to amounts derived using the lesser of a school district's indirect rate or the program's statewide average indirect cost
rate. Each district should compare these statewide rates with their individual indirect cost rate to determine the lesser rate for
use with these programs.
A listing showing the statewide rates for the last five years will also be available on the Webpage shown previously for indirect
cost rates.
Charter School Indirect Cost Rates
The approved 2009-10 indirect cost rates for charter schools are still being finalized and will be released shortly. Please
periodically check the indirect cost rates Web page shown previously for the status of the charter school rates. Once the rates
are posted, please share them with your school districts and charter schools.
SACS Query Page
To aid staff in identifying the allowable indirect cost rates for various programs, the SACSQuery system available on our Web
page at http://www.cde.ca.gov/fg/ac/ac/ includes this information for most programs.
If you have any questions regarding the indirect cost rates, please contact our office at 916-322-1770, or by e-mail at
sacsinfo@cde.ca.gov.
7.7
Revised April 2009

Sincerely,


Peggy O’Guin, Administrator
Financial Accountability and Information Services
PWO:bh
Enclosure
Y2009-2701
Last Reviewed: Friday, May 01, 2009
7.8
Revised April 2009

California Department of Education (CDE) - School Fiscal Services Division
Restricted Indirect Cost Rates for K-12 Local Educational Agencies (LEAs) - Five Year Listing
Rates approved based on standardized account code structure expenditure data
Address questions to sacsinfo@cde.ca.gov, or call (916) 322-1770.
* C = County CA= Common Administration
D = District J = Joint Powers Agency
------------------- A P P R O V E D R A T E S -------------------
For use with state and federal programs, as allowable, in:
2005-06
2006-07
2007-08
2008-09
2009-10
County
LEA
(based on 2003-04
(based on 2004-05
(based on 2005-06
(based on 2006-07
(based on 2007-08
Code
Code
Type*
LEA Name
expenditure data)
expenditure data)
expenditure data)
expenditure data)
expenditure data)
37
10371
C
San Diego County Superintendent
8.54%
8.22%
10.27%
9.76%
9.49%
37
67967
D
Alpine Union Elementary
3.16%
2.99%
3.30%
3.27%
2.81%
37
67975
D
Bonsall Union Elementary
4.41%
4.71%
4.05%
3.67%
5.95%
37
67983
D
Borrego Springs Unified
8.52%
7.95%
5.36%
7.72%
10.10%
37
67991
D
Cajon Valley Union Elementary
7.46%
7.28%
5.98%
5.13%
2.82%
37
68007
D
Cardiff Elementary
4.44%
3.82%
3.67%
3.83%
4.50%
37
68023
D
Chula Vista Elementary
4.76%
3.83%
3.54%
3.33%
3.04%
37
68031
D
Coronado Unified
6.29%
6.41%
3.97%
4.85%
6.29%
37
68049
D
Dehesa Elementary
5.62%
5.92%
1.72%
3.86%
10.04%
37
68056
D
Del Mar Union Elementary
6.00%
2.98%
2.07%
4.80%
2.75%
37
68080
D
Encinitas Union Elementary
5.04%
5.22%
5.19%
4.11%
5.55%
37
68098
D
Escondido Union Elementary
4.97%
4.21%
4.80%
5.30%
4.68%
37
68106
D
Escondido Union High
8.07%
7.20%
8.03%
10.22%
3.60%
37
68114
D
Fallbrook Union Elementary
6.69%
5.76%
5.01%
8.03%
8.72%
37
68122
D
Fallbrook Union High
10.32%
7.90%
8.00%
8.99%
8.79%
37
68130
D
Grossmont Union High
5.70%
5.03%
3.19%
3.38%
4.45%
37
68155
D
Jamul-Dulzura Union Elementary
4.56%
5.43%
2.00%
3.08%
4.63%
37
68163
D
Julian Union Elementary
6.16%
1.61%
2.70%
4.58%
2.47%
37
68171
D
Julian Union High
5.35%
11.14%
7.97%
4.09%
7.03%
37
68189
D
Lakeside Union Elementary
7.63%
6.49%
6.84%
8.45%
4.37%
37
68197
D
La Mesa-Spring Valley Elementary
3.64%
4.17%
2.92%
3.62%
6.02%
37
68205
D
Lemon Grove Elementary
10.06%
9.47%
8.06%
6.96%
5.23%
37
68213
D
Mountain Empire Unified
5.68%
6.57%
4.39%
3.84%
4.05%
37
68221
D
National Elementary
5.85%
5.94%
6.41%
6.07%
4.86%
37
68296
D
Poway Unified
5.19%
5.55%
4.95%
4.23%
4.68%
37
68304
D
Ramona City Unified
7.67%
6.74%
6.46%
6.52%
6.39%
37
68312
D
Rancho Santa Fe Elementary
11.03%
9.99%
9.41%
8.82%
8.57%
37
68338
D
San Diego Unified
5.83%
3.67%
4.64%
5.75%
3.05%
37
68346
D
San Dieguito Union High
7.45%
8.12%
6.12%
4.22%
3.86%
37
68353
D
San Pasqual Union Elementary
5.82%
0.32%
0.29%
3.51%
3.49%
37
68361
D
Santee Elementary
7.06%
6.98%
6.46%
7.44%
7.85%
37
68379
D
San Ysidro Elementary
5.58%
5.94%
4.31%
7.09%
4.83%
37
68387
D
Solana Beach Elementary
11.18%
9.01%
7.22%
7.30%
6.02%
37
68395
D
South Bay Union Elementary
6.15%
6.90%
6.13%
4.65%
5.78%
37
68403
D
Spencer Valley Elementary
15.98%
12.57%
2.01%
1.63%
4.56%
37
68411
D
Sweetwater Union High
4.63%
4.75%
5.37%
4.96%
4.43%
37
68437
D
Vallecitos Elementary
3.65%
5.56%
6.04%
8.07%
6.01%
37
68452
D
Vista Unified
4.61%
3.61%
3.99%
4.65%
4.59%
37
73551
D
Carlsbad Unified
5.83%
6.48%
4.84%
6.18%
6.39%
37
73569
D
Oceanside Unified
4.44%
4.32%
3.21%
2.84%
4.57%
37
73791
D
San Marcos Unified
3.16%
3.74%
3.78%
3.61%
3.61%
37
75416
D
Warner Unified
7.42%
10.93%
7.73%
8.34%
7.81%
37
75614
D
Valley Center-Pauma Unified
7.98%
6.32%
5.82%
5.96%
7.22%
7.9
Revised April 2009

7.10
May 2008

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