Additional Indirect Cost Information and Example for Grants under Restricted Rate Programs If you are applying for a grant from the U.S. Department of Education (ED) under a Restricted Rate Program that is subject to a statutory “supplement not supplant” restriction, you are required to use a restricted indirect cost rate. See the Education Department General Administrative Regulations (EDGAR), 34 CFR 75.563 [discretionary grants] at http://www.ed.gov/policy/fund/reg/edgarReg/edlite-part75e.html or 34 CFR 76.563 [formula grants] at http://www.ed.gov/policy/fund/reg/edgarReg/edlite-part76f.html, as applicable, and 34 CFR 76.564 through 76.569 at http://www.ed.gov/policy/fund/reg/edgarReg/edlite-part76f.html. Restricted rates for State Educational Agencies (SEA) are included on the SEA’s negotiated indirect cost rate agreement. Restricted rates for Local Educational Agencies are provided by the SEA, using a method approved by ED. The restricted rate requirements also apply to any subgrants from the prime recipient. All applicants must use the restricted rate included on their negotiated indirect cost rate agreement. Applicants for discretionary grants that are not a State or Local government and do not have a negotiated restricted rate, may use the 8% rate described at §76.564(c )(2). If an applicant’s calculated restricted rate is less than 8%, the lower rate must be used for the application’s budget. The 8% rate in §76.564(c)(2) must also be multiplied by the modified total direct cost base described in §76.569. For grants under Restricted Rate Programs, §76.569 requires that grantees multiply their restricted indirect cost rate by: “Total direct costs of the grant minus capital outlays, subgrants, and other distorting or unallowable items as specified in the grantee's indirect cost rate agreement.” Commonly, such a procedure is referred to as multiplying by a modified total direct cost base. Below is a simplified example for calculating indirect costs for a Restricted Rate program using budget categories from the ED 524 form, Budget Information – Non-Construction Programs. The ED 524 and Instructions can be found at: http://www.ed.gov/fund/grant/apply/appforms/appforms.html For the purposes of this example, a 6% restricted rate from a negotiated indirect cost rate agreement is used to calculate indirect costs. 1. Personnel 2. Fringe Benefits 3. Travel 4. Equipment 5. Supplies 6. Contractual 7. Construction 150,000 50,000 10,000 5,400 600 3,700 - 8. Other (tuition) 72,000 9. Total Direct Costs 291,700 Calculate Modified Total Direct Cost Base Total Direct Costs Less: Equipment 5,400 Tuition 291,700 72,000 77,400 Modified Total Direct Cost Base: Multiply $214,300 by 6% restricted rate: 10. Indirect Costs (using 6% restricted rate) 11. Training Stipends 12. Total Costs 214,300 12,858 12,858 304,558 American LegalNet, Inc. www.FormsWorkflow.com