Indianapolis Public Schools (IPS) is seeking a waiver of United States Department of Agriculture (USDA) Food Service guidance and certain regulations regarding paying from the fund indirect costs that were incurred by the District in previous years.
The USDA defines indirect costs as ones that are, “incurred for the benefit of multiple programs, functions, or other cost objectives and therefore cannot be identified readily and specifically with a particular program or other cost objective. Indirect costs typically support administrative overhead functions such as fringe benefits, accounting, payroll, purchasing, facilities management, utilities, etc.”
Many federal programs, including the school food program, allow recipients (such as IPS) to charge indirect costs. Federal funds recipients have an indirect cost rate established, which in turn, determines how much federal money can be used to pay the indirect costs incurred.
Prior to 2011, IPS did not seek indirect costs from the school food services account, even though a large surplus was growing in the account due to effective and efficient operation of the program. IPS began taking indirect costs from the program in 2011 and further ramped up efforts in 2014 to address the fund surplus.
IPS currently has a Food Service fund balance of approximately $17 million, which exceeds its needed fund balance to effectively operate. Therefore, it is requesting the USDA waive applicable guidance and regulations to allow for a delayed submission of indirect costs, for a period beginning in 2003, totaling $8,854,643.40.