Department: Management and Budget
Department Head/Elected Official: Daniel Ramos, Executive Director
Regular or Supplemental RCA: Regular RCA
Type of Request: Discussion Item
Project ID (if applicable): N/A
Vendor/Entity Legal Name (if applicable): N/A
MWDBE Contracted Goal (if applicable): N/A
MWDBE Current Participation (if applicable): N/A
Justification for 0% MWDBE Participation Goal: N/A - Goal not applicable to request
Request Summary (Agenda Caption):
title
Request for discussion and possible action on two proposed policies from the approved Harris County 5-year Financial Plan: the Grants Indirect Cost Policy and the Department and Special Fund Indirect Cost Policy.
end
Background and Discussion:
Following discussion on the September 10 Commissioners Court and input from Commissioners Court, OMB is returning for approval of the Grants Indirect Cost Policy and the Department and Special Fund Indirect Cost Policy.
Harris County incurs overhead costs, such as facilities and administration, in the General Fund to support various activities that are themselves not funded with the General Fund. The County currently has no uniform policy that establishes whether to or how to recover these indirect costs, and so they are managed in an ad hoc manner where some grants, departments, or special funds are charged indirect costs while others are not. There are two main cases where such costs occur: grants and special funds, and OMB is presenting two policies that cover each for discussion.
In the Grants Indirect Cost Policy, OMB proposes that indirect costs for grant applications should be at least 5% across Harris County unless otherwise approved. This amount is based on a study performed by MGT of America using actual expenditures and other data to determine full indirect costs attributable for County work. Departments can go higher than 5% without approval. OMB proposes to exclude grants for public infrastructure and exempt departments, whose main operating budget does not come from the General Fund, from the policy, as these grant indirect costs are captured in the Department and Special Fund Indirect Cost Policy.
In the Department and Special Fund Indirect Cost Policy, OMB proposes an indirect cost policy for departments, whose main operating budget does not come from the General Fund, and for special funds. It is preferred to capture or charge direct costs via an interlocal or other agreement. Where that is not practical, indirect costs will be determined for each department or special fund individually. The methodologies for determining indirect costs will include the most recent third-party full cost allocation plan, a specific percentage of fund or department budget, revenue, or expenditures, or a different methodology proposed and justified by OMB. Legal and accounting considerations will be included in proposed indirect cost charges. Regardless of the methodology proposed, OMB will present its recommendations to Commissioners Court each year for approval.
Expected Impact:
The policy will establish a policy around recovering indirect costs from grants. It seeks to set a floor for indirect cost billed to grants to capture some of the indirect costs the County incurs due to grants and establish a comprehensive policy around recovering indirect costs from other departments and special funds. It will allow OMB to develop and advise on indirect cost charges each year and ensure Commissioners Court reviews and approves all charges.
Alternative Options:
Commissioners Court can adopt a different policy regarding indirect costs. The County also could choose to not establish a policy and leave it up to the discretion of the department submitting the grant. This would likely lead to certain grant costs being subsidized by the General Fund and other non-grant funding sources.
The County could continue an ad hoc approach to seeking reimbursement for costs and subsidize other entities and special funds using General Fund dollars.
Alignment with Goal(s):
X Justice and Safety
X Economic Opportunity
X Housing
X Public Health
X Transportation
X Flooding
X Environment
X Governance and Customer Service
Prior Court Action (if any):
|
Date |
Agenda Item # |
Action Taken |
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6/4/2024 |
29 |
Request for presentation of and possible action on recommendations from the recently completed 5-year financial plan: approval of recommendations from the recently completed 5-year financial plan. |
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9/10/2024 |
TBD |
Request for discussion of two proposed policies from the approved Harris County 5-year Financial Plan: the Grants Indirect Cost Policy and the Department and Special Fund Indirect Cost Policy. |
Location:
Address (if applicable): Multiple
Precinct(s): Countywide
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Anticipated Court Date: September 19, 2024
Anticipated Implementation Date (if different from Court date):
Emergency/Disaster Recovery Note: Not an emergency, disaster, or COVID-19 related item
Contact(s) name, title, department: Bhumit Shah, Deputy Director, Expenditures, OMB
Attachments (if applicable): Indirect Cost Policy - Combined