8. What is Indirect Cost and how does my LEA obtain an approved Indirect Cost Rate?

Indirect Cost are those expenses that incur for the joint benefit of more than one project and cannot be readily and specifically identified with a particular project without effort disproportionate to the results achieved. Indirect Cost can ONLY be applied to federally funded projects. Please note that Indirect Cost may be restricted or disallowed on some federal grants.

Upon submittal of an Annual Financial Report (AFR) by a district or charter school, the district or charter school may request that the ADE calculate an Indirect Cost Rate (ICR) by placing a checkmark in the check box provided, and then submitting the additional required information.

The Audit Unit at ADE then calculates a restricted and a non-restricted rate and notifies the district or charter school of the approved restricted rate for use with State and Federal grants. Other entities (e.g. community-based organizations, community colleges and universities, state agencies, etc.) must provide to ADE Audit Resolution a copy of the letter of Indirect Cost from their cognizant agency showing their approved ICR in order for it to be entered into the Grants system.

Approved indirect cost rate can be found from the ADE Grants Management Indirect Cost at www.azed.gov/grants-management/indirect-costs/

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