Dear County and District Chief Business Officials and Charter School Administrators:

Indirect Cost Accounting Changes Effective Beginning 2025–26

This letter is a follow-up to the California Department of Education’s (CDE) letter dated February 4, 2025, titled "Federal Office of Management and Budget Uniform Guidance Implementation," in which the CDE announced that recent revisions made by the Office of Management and Budget (OMB) to sections of 2 CFR Part 200 “Uniform Guidance”, originally scheduled to take effect on October 1, 2024, would be contingent upon the U.S. Department of Education’s (ED) approval of the CDE’s Local Educational Agencies (LEA) indirect cost plan. The February 4, 2025, letter can be found on the internet at https://www.cde.ca.gov/fg/ac/ic/.

The CDE is pleased to announce that the U.S. Department of Education has approved an updated indirect cost plan for California. As a result, LEAs may begin applying the Uniform Guidance changes to federal awards starting July 1, 2025.

The following changes specifically impact the calculation of the indirect cost rate:

• Single Audit Threshold: Increased from $750,000 to $1,000,000. (2 CFR §200.501)
  
  
• Subagreement Exclusion Threshold: Increased from $25,000 to $50,000. (2 CFR §200.1)
  
  
• Equipment Definition Threshold: Increased from $5,000 to $10,000. (2 CFR §200.1)

For questions regarding these changes, please contact the Fiscal Oversight and Support Office at sacsinfo@cde.ca.gov.

Sincerely,

/s/

John Miles, Administrator
Fiscal Oversight and Support Office

JM:dm