New Process for Indirect Cost Rates

Word version


School districts must request an approved federal indirect cost rate each year to be eligible to charge indirect costs to a grant program. This letter describes the change to how school districts must request their federal indirect cost rates for the 2015–2016 school year.

School Districts

Effective September 1, 2014, school districts must submit their annual requests to TEA for an indirect cost rate using a new Indirect Cost Rate Proposal (ICRP). The J-2: Schedule for the Computation of Indirect Cost Rates can no longer be used by school districts to request an indirect cost rate. This change is part of a new delegation agreement to TEA recently approved by the US Department of Education.

TEA’s Indirect Cost Handbook, which provides guidance to local educational agencies on how to apply for an indirect cost rate, states that school districts should continue submitting the J-2 to request an indirect cost rate until further notice. This letter alerts school districts that the J-2 can no longer be used for this purpose. Please note that Title 19 of the Texas Administrative Code, §109.3003, adopts the Indirect Cost Handbook into rule.

Indirect Cost Rate Proposal (ICRP) Components and Timeline

The new ICRP will be available by the middle of October 2014, along with a new guidance handbook to help school districts complete the form. The school district must submit the ICRP by uploading it into the GFFC Reports and Data Collections secure application in TEASE/TEAL.

Appropriate school district staff should get access to the GFFC Reports and Data Collections application as soon as possible so that they can access the new form and guidance when they become available. For indirect cost rates for the 2015–2016 school year, the ICRP will be due to TEA in February 2015.

Key components of the ICRP include:

  • A certification of indirect costs to be signed by the superintendent.
  • A classification of costs into excluded, unallowable, direct, and indirect costs. Costs for all function codes reported in the Statement of Revenues, Expenditures, and Changes in Fund Balance–Governmental Funds of the district’s annual financial and compliance report must be classified.
  • A list of general management position titles with associated salary and fringe benefits. These positions include, but are not limited to, the superintendent, assistant superintendent, chief financial officer, head of service functions, and other district-wide positions.
  • The district’s organizational chart.
  • Supporting schedules that detail excluded costs.

Each of these components, as well as definitions of terms, will be explained more fully in the new guidance handbook.

For Further Information

If you have any questions about the ICRP, please email


Cory Green
Chief Grants Administrator
Division of Grants Administration