HomeMy WebLinkAboutMDT accounting procedure changeMontana Department of Transportation David A. Gait, Director
Jud~ Martz~ Governor
October 14, 2004
PO Box 201001
Helena MT 59620-1001
OCT 00,
CITY OF LAUREL
Subiect: Notification: accountin§ procedure change related to Jn(:lireet cost recove~f
Dear City, County-, Tribal Governments, Transit and Safety Grant Recipients:
I need to let vou~know MDT wi![implement a sign~_'fica~n~ ~hangejn accounting
procedures involving the recover), of indirect costs of federal grants beginning July 1,- - -
2005. This procedural change, which is necessary to comply with both state law and
federal requirements regarding the implementation of indirect costs, will impact
your agency.
The Montana Legislature enacted House Bill 21 during the 2002 special session as a
general fund savings measure. This bill requires all state agencies, including the
MDT, to fully recover indirect costs associated with federal and third party grants.
The purpose of indirect cost recove~ requires all agencies to maximize the use of
federal funds for all costs associated with delivering federal programs. To comply
with this law, MDT programmed a separate project to accumulate indirect costs and
bill them to federal agencies. The Federal Highway Administration (FHWA), the lead
agency for the US Department of Transportation, initially accepted this as a
temporary solution. However, in May 2004, FHWA directed agencies that request
reimbursement for indirect costs to assess the costs at theproj?ct rather than the
program level in order to provide full accountability of both direct and indirect costs.
My staff and I are concerned abouT the adverse impacts this mandatory procedure
will have on projects of interest to your agency and constituents. Because of our high
level of concern, we are wot 'king with FHWA regarding options other than to
account for indirect costs at the project level. However, in the event the current
requirements hold, I am notifying you of this change and its impact so you will be
able to prepare prior to the July 2005 implementation date. The following programs
~viil be affected:
· ~lYansit
· Urban
· Secondau-
· Community Transportation Enhancement Program (CTEP)
· Highway Traffic Safe~ Grants
· Congestion Mitigation and Air Quality Improvement (CMAQ)
Fax: (406) 444 7643 TTY. (800~ 335-7592
House Bill 21 mandates the amount available for direct costs to the grant - project
will be reduced by the indirect cost percentage, which is currently 12.38%. This
reduction will apply to all projects and awards listed above. The indirect cost rate,
calculated by MDT and approved by FHWA annually, will be applied to all project
costs and all phases at the time of expenditure starting July 1, 2005. The attached
example shows how this process would ~vork.
If you have technical questions, please contact our Administration DMsion
Administrator Monte Brown at 406-444-6373 or our Accounting Ser~4ces Bureau
Chief Darrell Zook at 406-444-6036. If you have a policy-related issues, please
contact Deputy Director Jim Currie at 406 444-6201.
Sincerely,
David A. Gait
Director
attachment
The Honorable United States Senator Conrad Burns
The Honorable United States Senator Max Baucus
The Honorable United States Representative Denny Rehberg
The Honorable Representative Joe Balyeat
The Honorable Representative Bob Bergren
The Honorable Representauve Sylvia Bookout-Reinicke
The Honorable Representative Ellen Carney
The Honorable Represenmtxve Ronald Devlin
The Honorable Representative Dave G.llik
The Honorable Representauve George Golie
The Honorable Representauve Christine Kaufrnan
The Honorable Representauve Jim Keane
The Honorable Representative Bernie Olson
The Honorable Representative Rome
The Honorable Representative Frank Smith
The Honorable Representauve Donald Steinbeisser
The Honorable Representauve Karl Waitschies
The Honorable Representative Bill Wilson
The Honorable Senator Sherm Anderson
The Honorable Senator Gregory Barkus
The Honorable Senator Jerry Black
The Honorable Senator Edward Butcher
The Honorable Senator Vicki CoccNaxella
The Honorable Senator Mike Cooney
The Honorable Senator Aubyn Curtiss
The Honorable Senator Bob DePratu
The Honorable Senator Jon Ellingson
The Honorable Senator Duane Grimes
The Honorable Senator Dan Hazrington
The Honorable Senator Sam ICitzenberg
The Honorable Senator Jerry O'Neil
The Honorable Senator Gerald Pease
The Honorable Senator Glen Roush
The Honorable Senator Robert Story
The Honorable Senator Ken Toole
Dan R-ice, Transportation Cornrmssioner
Kevin Howlett, Transportation Comnussioner
Meredith Reiter, Transportation Commiss/oner
Nancy Espy, Transportation Commissioner
SNell Anderson, Transportation Commissioner
Montana Department of Transportation Administrative Staff