DAR File No. 42118

Education, Administration

Rule R277-424

Indirect Costs for State Programs

Notice of Proposed Rule

(Amendment)

DAR File No.: 42118
Filed: 09/15/2017 08:50:58 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

Following a five-year review, the Utah State Board of Education determined that Rule R277-424 continued to be necessary so it was continued. The rule is amended to provide necessary technical and conforming changes to bring the rule into compliance with the Rulewriting Manual for Utah.

Summary of the rule or change:

The amendments to this rule provide technical and conforming changes that include changes to numbering, references, and terminology.

Statutory or constitutional authorization for this rule:

• Subsection 53A-1-402(1)(e)
• Art X Sec 3
• Section 53A-1-401

Anticipated cost or savings to:

the state budget:

The amendments to Rule R277-424 provide technical and conforming changes which will likely not result in a cost or savings to the state budget.

local governments:

The amendments to Rule R277-424 provide technical and conforming changes which will likely not result in a cost or savings to local governments.

small businesses:

The amendments to Rule R277-424 provide technical and conforming changes which will likely not result in a cost or savings to small businesses.

persons other than small businesses, businesses, or local governmental entities:

The amendments to Rule R277-424 provide technical and conforming changes which will likely not result in a cost or savings to persons other than small businesses, businesses, or local government entities.

Compliance costs for affected persons:

The amendments to Rule R277-424 provide technical and conforming changes which will likely not result in any compliance costs for affected persons.

Comments by the department head on the fiscal impact the rule may have on businesses:

After conducting a thorough analysis, it was determined that the amendments to this rule will not result in a fiscal impact to businesses.

Sydnee Dickson, State Superintendent

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Education
Administration
250 E 500 S
SALT LAKE CITY, UT 84111-3272

Direct questions regarding this rule to:

• Angela Stallings at the above address, by phone at 801-538-7656, by FAX at 801-538-7768, or by Internet E-mail at angie.stallings@schools.utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/31/2017

This rule may become effective on:

11/07/2017

Authorized by:

Angela Stallings, Deputy Superintendent, Policy and Communication

R277. Education, Administration.

R277-424. Indirect Costs for State Programs.

R277-424-[2]1. Authority and Purpose.

[A.](1) This rule is authorized by:

(a) Article X, Section 3 of the Utah Constitution, which vests general control and supervision [of]over public education in the Board[,];

(b) Section 53A-1-401[(3)], which allows the Board to [adopt rules in accordance with its responsibilities.] make rules to execute the Board's duties and responsibilities under the Utah Constitution and state law; and

(c) [Section]Subsection 53A-1-402(1)(e) , which directs the Board to adopt rules for financial, statistical, and student accounting requirements[; and].

[B.](2) The purpose of this rule is to establish Board standards for claiming indirect costs for state programs.

 

R277-424-[1]2. Definitions.

[A. "Board" means the Utah State Board of Education.

B.](1) "Direct costs" mean[s] costs [which] that can be easily, obviously, and conveniently identified by the [Utah State Office of Education] Superintendent with a specific program.

[C.](2) "Indirect costs" mean[s] the costs of providing indirect services. [Restricted and non-restricted indirect costs are defined in R277-425, "Budgeting, Accounting and Auditing Handbook for Utah School Districts."]

[D.](3) "Indirect Services" mean[s] services [which] that cannot be identified with a specific program.

[E. "LEA" means a local education agency, including local school boards/public school districts and charter schools.

F. "Non-restricted indirect cost rate" means a rate assigned to each LEA annually, based on the ratio of non-restricted indirect costs to direct costs as reported in the annual financial report for the specific LEA.

G.](4) "Restricted indirect cost rate" means a rate assigned to each LEA annually based on the ratio of restricted indirect costs to direct costs as reported in the annual financial report for the specific LEA.

[H.](5) "Unallowable costs" mean[s] expenditures directly attributable to governance[. Governance includes], including:

(a) salaries;[and]

(b) expenditures of the office of the district superintendent, the governing board, and election expenses[,]; and

(c) expenditures for fringe benefits, which are associated with unallowable salary expenditures.

(6) "Unrestricted indirect cost rate" means a rate assigned to each LEA annually, based on the ratio of unrestricted indirect costs to direct costs as reported in the annual financial report for the specific LEA.

 

R277-424-3. Standards.

[A.](1) An LEA[s] may charge indirect costs to state funded programs.

(2) The [Board]Superintendent [shall]may not authorize or pay indirect costs to higher education institutions for state funded contractual work.

[B.](3)(a) Prior to the beginning of each fiscal year, the [Utah State Office of Education]Superintendent shall publish[es] a schedule of the indirect cost rates for state programs.

(b) The [schedule is]Superintendent shall develop[ed] the schedule from [data gathered from]information contained in the [A]annual [F]financial [R]reports and specifically identified items submitted by [the ]LEAs.

(c) Each program schedule [shows]shall include:

(i) whether or not the restricted or [non-restricted]unrestricted indirect cost rate applies ; and

(ii) whether or not indirect costs are allowable or applicable.

[C.](4)(a) An LEA may recover[y of] indirect costs [is subject to availability of]if funds are available.

(b) If a combination of direct and indirect costs exceeds funds available, then the LEA may not recover the total cost of the project or program.[Recovery of indirect costs for state programs is optional for LEAs.]

(c) Recovery of indirect costs is not optional for state programs.

(d) If an LEA elects to recover indirect costs, the LEA shall use the annual rates negotiated by the Superintendent for all applicable federal and state programs.

[D.](5)(a) An LEA may only recover indirect costs for state programs [may be recovered only] to the extent that direct costs were incurred.

(b) The Superintendent shall apply the indirect cost rate [is applied ]to the amount expended, not to the total grant, in order to determine the amount for indirect costs.

 

KEY: education finance

Date of Enactment or Last Substantive Amendment: [November 8, 2012]2017

Notice of Continuation: September 13, 2017

Authorizing, and Implemented or Interpreted Law: Art X Sec 3; 53A-1-402(1)([f]e ); 53A-1-401[(3)]