John R. Kasich , Governor
Dr. Richard A. Ross , Superintendent of Public Instruction
G R AN T S M AN AG EM E N T G U I D AN C E 2 0 1 5 - 0 0 2
SUBJECT:
DATE ISSUED:
Severance Pay
APRIL 29, 2015
The purpose of this document is to provide guidance applying Severance Pay to a
Federal grant.
2 C.F.R. Part 225 (A-87) Appendix B, Part 8g states that:
(1) Payments in addition to regular salaries and wages made to workers whose employment is being terminated are allowable to the extent that, in each case, they are required by law, employer - employee agreement, or established written policy;
(2)Severance payments (but not accruals) associated with normal turnover are allowable. Such payments shall be allocated to all activities of the governmental unit as an Indirect cost;
(3) Abnormal or mass severance pay will be considered on a case-by-case basis and is allowable only if approved by the cognizant Federal agency.
34 CFR 75.560(b) (EDGAR) A grantee must have obtained a current indirect cost rate agreement from its cognizant agency, to charge indirect costs to a grant. To obtain an indirect cost rate, a grantee must submit an indirect cost proposal to its cognizant agency …
Effective July 1, 2015
Per OMNI § 200.431 Compensation—fringe benefits. (3) Actual claims paid to or on behalf of employees or former employees for workers’ compensation, unemployment compensation, severance pay, and similar employee benefits (e.g., postretirement health benefits), are allowable in the year of payment provided that the non-Federal entity follows a consistent costing policy and they are allocated as indirect costs.
An Indirect Cost Rate (ICR) is a mechanism for determining in a reasonable manner the portion of indirect costs each grant should bear. It is the ratio, expressed as a percentage, of the indirect costs to the direct costs.
To obtain an ICR, a grantee must submit an indirect cost proposal/application to the Ohio
Department of Education to the attention of Tracy Knowles
( tracy.knowles@education.ohio.gov
) in the ODE Office of Grants Management. Once a rate is negotiated and approved, the grantee will calculate the appropriate allocation of indirect costs associated with any one grant by applying the negotiated rate to the respective base used to develop the rate. The ICR amount should be identified within the budget page under Purpose
Code-Indirect Cost and Object Code-800-Other.
For general questions please email to:
25 South Front Street
Columbus, Ohio 43215 education.ohio.gov
(877) 644-6338
For people who are deaf or hard of hearing, please call Relay Ohio first at 711.