The treatment of indirect administration costs under federal funding sources is governed by the Code of Federal Regulations eCFR 200.414. In the spring of 2023, the department received guidance that stated that reimbursable indirect costs claimed by a sub-recipient of federal funds under the “de minimis” method was capped at 10% of the first $25,000 of the contract.
To remain in compliance with the guidance, Human Services staff worked to adjust contract language and contract payment request forms, and to communicate the change to provider agencies. Staff also worked to support agencies by assisting with the development of alternatives to claiming the “de minimis” amount and instead support costs with Cost Allocation plans and increase the amount of eligible indirect costs for reimbursement. We shared this information with our own staff in an internal memo on May 23, which you also may have received from your Human Services Contract Manager.
Later in the summer, Human Services issued guidance to providers in a formal, external memorandum dated August 8, 2023, explaining the treatment of administration and indirect costs under different types of funding. Simultaneously, staff continued to reach out to our federal funders to confirm the interpretation of the guidance. We have now received corrected guidance from our funders that invalidates prior information shared.
Under the “de minimis” method of claiming federal funding, if a sub-recipient passes funds to another agency, the sub-recipient is limited to claiming 10% of the first $25,000 reimbursed to that agency. Sub-recipients may also claim 10% of eligible direct costs as detailed in the eCFR200.414 and as per the definition of the Modified Total Direct Costs (MTDC) defined in eCFR200.1.
In lieu of this new information, we have sent this revised memo to contracted service provides, which reflects the change in guidance and removes the limit from total indirect costs claimed under federal funding. Our finance team is adjusting contract payment request forms (CPRs, or invoices) to reflect the change and are reaching out to providers individually and during scheduled office hours. Any agency affected by the change in guidance is encouraged to re-submit reimbursement requests using the “de minimis” calculation prior to the end of the contract period.
Click to view the revised memo.
If you have any questions about the revised guidance, please reach out to Jackie Carney, Administration and Finance Officer, at [email protected].