Indirect costs are overhead expenses incurred by the contracting agency as a result of the project but that are not easily identified with the specific project. Generally, indirect costs are defined as administrative or other expenses that are not directly allocable to a particular activity or project; rather they are related to overall general operations and are shared among projects and/or functions. (Indirect costs are sometimes referred to as “overhead costs” and more recently by the government as “facilities and administrative costs.”) Examples include executive oversight, accounting, grants management, legal expenses, utilities, technology support, and facility maintenance.
The Department of Education is often considered a minimum funded state when receiving federal grants and therefore receives a limited amount of funding that can be used for carrying out the administrative and state level required services.
Therefore, it is the policy of the Department of Education that the indirect cost rate paid in contracts and agreements with external agencies will be restricted to a maximum indirect cost rate of 8% or other indirect cost rate calculated by their cognizant federal agency, whichever is less, for all contracts and agreements administered by the South Dakota Department of Education.