Indirect Rates
What is an indirect cost?
Indirect costs represent the expenses of doing business that are not readily identified with a particular grant, contract, project function, or activity, but are necessary for the general operation of the organization and the conduct of activities it performs. In theory, costs like heat, light, accounting, and personnel might be charged directly if little meters could record minutes in a cross-cutting manner.
However, this is not practical; therefore cost allocation plans or indirect cost rates are used to distribute those indirect expenditures. Typically, salaries and expenses for auditing, budgeting, payroll, personnel, purchasing, etc. are examples of costs that are considered to be indirect costs.
For state programs that allow an indirect cost rate (except for LAP which uses the restricted federal rate), the rate is 7% for school districts and 11% for ESDs.
For federal programs that allow an indirect cost rate, the rate is calculated individually for each district for both restricted and unrestricted rates. For ESDs, the rate is 9%.
For additional information regarding indirect costs, as well as the posting of current indirect cost rates, please refer to
District Federal Indirect Rates (Restricted and Unrestricted)
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