Indirect Costs in the Summer Food Service Program

This Management Bulletin provides guidance on indirect costs in the Child and Adult Care Food Program (CACFP) and Summer Food Service Program (SFSP). The U.S. Department of Agriculture (USDA) issued Policy Memorandum SP 30-2015, CACFP 16-2015, and SFSP 18-2015 to clarify when sponsors must apply the new rules under Title 2, Code of Federal Regulations (2 CFR), Part 200 to federal awards.

Subtitle A, Chapter II, Part 200 of 2 CFR replaces existing rules in Title 7, Code of Federal Regulations, parts 3015, 3016, 3019, and 3052, and cost principles addressed in 2 CFR, parts 220, 225, and 230 (Office of Management and Budget Circulars A-21, A-87, and A-122, respectively). Sponsors can find the Super-Circular on the U.S. Government Publishing Office eCFR Web page at http://www.ecfr.gov/cgi-bin/text-idx?node=2:1.1.2.2.1 [Note: The prior 2 CFR has been superseded. Please see the updated regulation webpage at http://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200], and may find the indirect cost section particularly beneficial. 

Section 200.414(f) of 2 CFR states:

In addition to the procedures outlined in the appendices in paragraph (e) of this section, any non-Federal entity that does not have a current negotiated (including provisional) rate, except for those non-Federal entities described in appendix VII to this part, paragraph D.1.b, may elect to charge a de minimis rate of 10% of modified total direct costs (MTDC) which may be used indefinitely. No documentation is required to justify the 10% de minimis indirect cost rate. As described in § 200.403, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. If chosen, this methodology once elected must be used consistently for all Federal awards until such time as a non-Federal entity chooses to negotiate for a rate, which the non-Federal entity may apply to do at any time.

Nonprofit agencies participating in the CACFP or SFSP that have more than one source of funding, have shared costs that are not associated with one program, and have never obtained a negotiated indirect cost rate from their cognizant agency, may elect to include a 10 percent indirect cost rate in their budget beginning in the 2015–16 program year, and continuing indefinitely.

Agencies are required to submit a document from their cognizant agency the first year these indirect costs are included in their program budget that proves that they have never received an indirect cost rate in the past. While agencies are not required to submit a cost allocation plan to obtain initial approval for these indirect costs, agencies must maintain documentation to show that all costs charged to the CACFP and SFSP are allowable.

Summary

If your agency wishes to include indirect costs in its program budget, you must submit one of the following to your assigned program specialist:

1. If you have obtained an indirect cost rate from your cognizant agency, submit the verification letter from the cognizant agency.
2. If you have not yet obtained an indirect cost rate from your cognizant agency, submit verification from the cognizant agency that states that you have never received an indirect cost rate in the past.

Questions

If you have any questions regarding this Management Bulletin, please contact your CACFP or SFSP Analyst.

CACFP

Please visit the California Department of Social Services (CDSS) CACFP webpage at http://www.cdss.ca.gov/cacfp or call 1-833-559-2418 for more information.

SFSP

The SFSP Analyst Contact List is located in the Child Nutrition Information and Payment System (CNIPS) Download Forms section, Form ID Caseload. If you have any questions regarding this subject, please contact the Summer Nutrition Programs and Grants Unit by email at SFSP@cde.ca.gov.