Improving Indirect Cost Rate Use in Island Jurisdictions
Island Areas Workgroup, Health Financing Subgroup
October 31, 2023
Indirect cost rates (ICRs) are a critical component of effective financial management for public health agencies. ICRs let recipients allocate shared administrative costs across all grant program areas, allowing them to save on costs and support salaries for cross-cutting staff. Establishing and maintaining ICRs poses substantial advantages to public health agencies but also requires a significant time investment, strong accounting practices, and a robust grants management infrastructure.
The eight U.S. Island jurisdiction health agencies face unique grants management challenges inherent to their small populations and remote geography. These include limited staffing, smaller grant volumes, and smaller local treasuries. These factors contribute to territorial and freely associated state government agencies’ historical challenges in efficiently managing and spending down federal funds.
This report outlines how Island jurisdictions can use existing policies to improve their ICR utilization and maximize federal funding, as well as further steps agencies can take to strengthen their financial management systems.