Indirect Cost Rate Approval Process

The Maine Department of Education would like to share updated information concerning our indirect cost rate approval process.

The Department issues an indirect cost rate for a specific fiscal year that is valid from July 1 to June 30 of the applicable fiscal year. The indirect cost rate is applied to the direct cost amount expended, not to the grant award. Indirect costs are recovered only to the extent of direct costs incurred.

To recover indirect costs, the LEA applies the indirect cost rate in affect for a given fiscal year or the term of the grant award to the direct expenditures less capital outlay during that fiscal year or the term of the grant award.

In order for districts to receive approval of their indirect cost rate, the audit reconciliation with MEFS must be completed. The Department also recommends completing the following training to all districts that apply: Indirect Cost Training Course FY 21 (

Development of Indirect Cost Rates:

  • The Department sources information from the LEA’s official annual upload to MEFS and the detail accounts that make up that report.
  • The Department will prepare a “preliminary indirect cost rate” for LEAs requesting an indirect cost rate and may be requested for certification.
  • Once preliminary indirect cost rates are provided to the LEA, the LEA shall provide information for subawards and subcontracts so to calculate an adjustment to the indirect cost rate prior to final certification.
  • Predetermined rates that are certified and the certifications will be published to:
  • Restricted indirect cost rates will be limited to 8%. Unrestricted indirect cost rates are limited to 15%. All preliminary calculated rates outside of the statistical norm are subject to review to ensure the proper classification of costs.

The following information has been added to the Indirect Cost Rate Agreement:

  • Distribution Base: MTDC Modified Total Direct Cost – Total direct costs excluding equipment, capital expenditures, participant support costs, pass-through funds, and the portion of each subaward (subcontract or subgrant) above $25,000 (each award; each year).
  • Applicable To: Restricted- Restricted rates apply to programs that require a restricted rate per 34 CFR 75.563 and 34 CFR 76.563.
  • Treatment of Fringe Benefits: Fringe benefits applicable to direct salaries and wages are treated as direct costs. Pursuant to 2 CFR 200.431, (b), (3), Paragraph (i), unused leave costs for all employees are allowable in the year of payment. The treatment of unused leave costs should be allocated as an indirect cost except for those employee salaries designated as a direct cost for the restricted rate calculation.
  • Capitalization Policy: Items of equipment are capitalized and depreciated if the initial acquisition cost is equal to or greater than $5,000.

If you have any questions as you review these printouts, please contact our School Finance Team member Mary Randall,, for assistance.