Carryover Complications

Say a school is allotted $20,000 (with carryover allowed) and they only spent $15,000.  The carryover amount is:

a) $5,000

b) something else

Often the answer is b) “something else”

This is because the central office will usually give the school site the net award amount – i.e. the award minus the indirect cost on the award.  Since indirect cost rates change annually, carryover will be affected,

Carryover Calculation

The difference between the gross carryover amount and the net carryover (in this example $274) is held centrally and is used to absorb indirect costs on the following year’s site spending.

You might want to show this calculation to your site principals when they inquire about the difference between the carryover amount they were expecting and the amount they actually received. If they run an end-of-year report on this award they’ll be looking at an unspent balance of $5,000 and they may think you just shorted them $24.

Think of the alternative.  In Year 1 you kept $1,000 centrally and took $750 as an indirect.  That left $250 centrally.  You give the school $5,000 in carryover and they spend it.  When you try to apply that year’s indirect rate to the amount spent you will find that you are short.

Of course, site principals often chafe at the idea of indirect costs being taken at all.  That conversation is a topic for another day.

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