Finding 6: ADE charged indirect costs to State Leadership.
Relevant sections of law and regulation: Sections 221, 222, 223, and 241(a) of AEFLA (Pub. L. 105-220)
Discussion: ADE has charged unrestricted, indirect costs to both State Administration and State Leadership funds, at the rate they negotiated with their cognizant agency, U.S. Department of Education. The team saw evidence of indirect charges on their budget balance reports, for State FYs2012, 2013, and 2014. AEFLA grantees may charge a restricted indirect cost rate against State Administration, but not State Leadership.
The budget balance reports provided on-site revealed potential overspending on AEFLA State Administration, resulting from indirect cost expenditures if the indirect costs were applied appropriately under State Administration. Specifically, based on ADE’s award amount for FFY 2011, its State Administration cap was $637,729.65. However, it charged $67,757.71 in indirect costs under State Administration; $130,053.29 under State Leadership; and, $19,196.64 under EL/Civics State Leadership, using its ED negotiated indirect cost rate. If the additional indirect costs charged under State Leadership had been correctly included only under State Administration, ADE would have exceeded its cap on State Administration costs, by $149,249.93 ($130,053.29 + $19,196.64).
DAEL may pursue recovery of past overcharges to State Administration, as a result of failure to report any indirect cost charges on federal financial reports. However, DAEL is not inclined to pursue repayment, provided that ADE commits to timely completion of the required actions above.