Finding Text
Finding: The District incorrectly calculated the Federal indirect cost rate, resulting in excessive indirect costs charged to the Title I grant and questioned costs totaling $71,563. Criteria: Title 2, Part 200, Code of Federal Regulations, provides principles for determining allowable costs, including indirect costs that may be allocated to a Federal award program. Indirect costs are costs that are incurred for a common or joint purpose, are not readily identified with a particular final cost objective without effort disproportionate to the results achieved and are calculated by multiplying allowed costs by an approved indirect cost rate. The Florida Department of Education (FDOE) Indirect Cost Plan Instructions specify that certain expenditures, such transfers, debt service, and food services, are to be excluded from the indirect cost rate calculation and that other expenditures should remain in the calculation such as charter school expenditures. Condition: During the 2024-25 fiscal year, the District charged the Title I program $117,750 based on the District-calculated and FDOE-approved indirect cost rate of 8.69 percent. However, our examination of District records supporting the District-calculated indirect cost rate disclosed that the calculated amounts incorrectly omitted consideration of charter school expenditures. Cause: District personnel misunderstood how to properly calculate the indirect cost rate. Effect: The District indirect cost rate of 8.69 percent exceeded the correct rate of 3.35 percent by 5.34 percent, resulting in excessive indirect costs charged to the Title I grant and questioned costs totaling $71,563. Recommendation: The District should enhance procedures to ensure that the amounts used in the indirect cost rate calculation are accurate and comply with FDOE instructions. Such enhancements should include appropriate training for those responsible for calculating the indirect cost rate. District Response: The District recognizes and understands the incorrect calculation of the Federal indirect cost rate applicable to the 2024-25 fiscal year and has prepared subsequent indirect rate calculations for the fiscal years 2025-26 and 2026-27 that included other expenditures (i.e. charter school expenditure) that were incorrectly omitted in the rate for the 2024-25 fiscal year.