SBOE Adjusts Indirect Cost Allotment

In accordance with SB 1 passed by the Texas Legislature this past special session, the State Board of Education (SBOE) adopted an amendment to the Texas Administrative Code to update the maximum indirect cost rate as it pertains to special programs, including career & technology education (CTE).

After a lengthy discussion about what counts as a direct expenditure and what counts as indirect expenditure, the SBOE adopted language that would increase the indirect cost rate for compensatory education, bilingual education and special education to 48 percent (from the current 45). The rate for gifted education is set at 45 percent. The rate for CTE is increased to 42 percent (from 40 percent).

The SBOE, within its authority, adopted an additional modification to the indirect cost rate. Beginning with the 2012-13 school year, and all subsequent school years in which a school district receives less in local and state maintenance and operations revenue per weighted student, districts will be allowed to increase the indirect cost allotment for special education, gifted and talented, bilingual education and career and technical education even further. However, increases will be limited proportionally to a district's revenue loss per weighted student.

This will allow districts greater flexibility while they are dealing with revenue cuts, but the SBOE would like to return to hard caps at some future point when district revenue per student begins to increase. The methodology to be adopted by the commissioner may not allow a district to increase their indirect cost rate by more that the percent decline in their state and local revenue as compared to 2011‐12.