I C R P

1. I C R P

2. What is ICRP? Indirect Cost Rate Proposal The documentation prepared by a governmental unit inaccordance with OMB Circular A-87 to substantiate its request for the establishment of an indirect cost rate.

3. Why do we prepare ICRP? • Comply with Senate Bill 45 requiring all non-reimbursement Capital Outlay Support projects to include the functional indirect costs as part of project costs. • Comply with the State’s Full Cost Recovery Policy to recover full costs whenever goods or services are provided for others.

4. What are Full Costs? • DIRECT COSTS: • Identifiable with a specific cost objective. • INDIRECT COSTS: • Not identifiable with a specific cost objective. • Not assignable to specific cost objective without disproportionate expense.

5. How are indirect costs assessed to projects? The Department utilizes Indirect Cost Rates to charge individual projects for their fair share of Indirect costs. • Program Functional Rate • Administration Rate

7. What is the Program Functional Rate? TotalIndirect Cost • ---------------------------------- = Functional Rate • Direct Labor Examples of indirect costs: • Non-project Management & Supervision • Non-project Travel & Per Diem • Non-project Training

8. PROGRAMFUNCTIONALRATE Component: • Indirect EAs • Off-the-Top EAs with Distribution to multiple programs Calculation: Indirect Cost Pool Program Functional INDIRECT LABOR & OE ---------------------------------- = Functional Rate Base44.70% Capital Outlay Support ProgramFunctional DIRECT LABOR(Rate effective from 07-01-07 to 06-30-08)

9. What is the Administration Rate? TotalIndirect Cost • ---------------------------------- = Administration Rate • Direct Labor Examples: • Audits • Accounting • Personnel

10. ADMINISTRATION RATE Component: • General Administration • Legal Services • Professional & Technical Services • Building & Equipment depreciation • Bond Interest Expense • Central Service Costs (SWCAP & ProRata)

11. ADMINISTRATION RATEThe Administration Rate is computed in two steps: Calculation: STEP #1 Total Administration costs are prorated to Department’s major programs. STEP #2Prorated Administration Costs are divided by the program Direct Labor Indirect Cost Pool Administration LABOR & OE ------------------------------------- = Administration Rate Base27.87% = Program 20.xx ProgramFunctional DIRECT LABOR (Rate effective from 07-01-07 to 06-30-08)

12. Both Rates Are Added TogetherFor Billing e.g. Capital Outlay Support (rates effective from 07-01-07 to 06-30-08 business month) PROGRAM FUNCTIONAL RATE 44.70% ADMINISTRATION RATE + 27.87% ------------- *Billing Rate 72.57%

13. How are indirect costs assessed to Reimbursed Projects? Indirect Cost Assessment on a Reimbursement project: Project Direct Labor cost = $ 3,500.00 Apply Payroll Reserve Rate =x 61.30% Loaded Labor ($3,500 plus 61.30%)=$5,645.50 Apply Indirect Cost Rate =x 72.57% Indirect Cost Assessment($5,645.50 times 72.57%)= $4,096.94 • Indirect cost assessment posted to project as O.E.costs: ProjectEAFSProgramObjectIndirect Cost Assessment $$$$$$ R20.10.$$$093$4,096.94

14. How are indirect costs assessed to SB45 Projects? Indirect Cost Assessment on a SB45 project: Project Direct Labor cost = $ 3,500.00 Apply Payroll Reserve Rate = x 61.30% Loaded Labor ($3,500 plus 61.30%)=$ 5,645.50 Apply Indirect Cost Rate = x 44.70% Indirect Cost Assessment($5,645.50 times 44.70%)= $2,523.54 • Indirect Assessment posted to project as O.E.costs: Project EAFSProgramObjectIndirect Cost Assessment $$$$$$T20.10.$$$193$ 2,523.54

15. Who is impacted by ICRP? • Resource Managers and Project Managers: • Projection and budget estimates • Planning and allocating resources • Project management.

16. Questions? Jack Kelsey 916-227-4298 Nia Jiang 916-227-9238