Updated: Sep 15
Everyone has heard of the federal Office of Management and Budget (OMB) Circular A-87. And everyone feels they need an A-87 Cost Allocation Plan to recover the administrative costs of any federal grants that they may have. But when you get into the detail of the A-87 Circular there is a lot of detail about what is allowed and what is disallowed. There is also a requirement for timesheets to substantiate that the staff allocations are correct. Without the timesheets you will have serious problems getting your Cost Plan approved. Then you need to figure out if your federal grants will allow for the recovery of any additional administrative costs, even with an approved A-87 Cost Plan. So you will probably go through a lot of work without much reward.
But then Caltrans comes to the rescue…
While they stay within the guidelines of the A-87 Circular, they will accept a much simpler version of the Cost Allocation Plan than has traditionally been accepted by HUD or the State Controller’s Office. The key distinction is that with a more complicated Cost Plan you may split the Finance department into five different services, but in the simple Cost Plan the Finance department is just one service. Now there is no longer a need for timesheets because everyone is spending 100% of their time on one service.
The A87 Cost Plan Spreadsheet is now something that can be done on a simple spreadsheet with just a couple of tabs (click the link for Cost Plan to see a sample spreadsheet). Feel free to adapt this spreadsheet to suit your agency. You will most likely want to use actual expenditures. If you use budgeted expenditures to get a provisional rate in place right away you will still have to go back and create a Cost Plan using actual expenditures and calculate a roll-forward to make up for any differences.
So if you receive enough money from Caltrans in any one year to make it worth your while then you should look into getting your administrative costs recovered also.