Short answer

The maximum is your district's current TEA-approved restricted indirect cost rate (2026-2027 ESSA Consolidated Program Guide, p. 15).

There is no single statewide percentage. TEA approves restricted and unrestricted rates for school systems (check your current rates on TEA's Indirect Cost Rates page), and Title I, Part A uses the restricted rate (TEA General and Fiscal Guidelines, eff. 7/1/2025, p. 39).

The detail

Why restricted:

• Supplement, not supplant drives the rate. "The restricted indirect cost rate is used for grant programs where the supplement, not supplant requirement applies. The majority of the grants that TEA administers are subject to SNS, and the restricted indirect cost rate is applied to them." (TEA General and Fiscal Guidelines, eff. 7/1/2025, p. 39)
• Title I, Part A and Title II, Part A are SNS programs → restricted rate (2025-2026 ESSA Consolidated Program Guide, pp. 14-15 and 76-77).
• Sections 76.564 through 76.569 apply to programs with a statutory prohibition on supplanting (34 CFR § 76.563). Each SEA must approve an indirect cost rate for each LEA that requests it (34 CFR § 76.561).

How to apply it:

• Use the current-year agreement. Grantees must comply with thresholds in their current indirect cost rate agreements issued by TEA (TEA General and Fiscal Guidelines, eff. 7/1/2025, p. 39).
• Formula: Indirect costs = (Restricted rate) × (Total direct costs minus capital outlays, subawards exceeding MTDC amount each per year, and other distorting/unallowable items in the agreement) (34 CFR § 76.569).
• Use the Worksheet, not rate × award. "To calculate the maximum indirect costs that can be claimed for a grant, complete the Maximum Indirect Costs Worksheet" (2026-2027 ESSA Consolidated Program Guide, p. 15).
• Base is actual expenditures, and it comes out of the award. "Indirect costs are calculated and reimbursed based on actual expenditures when reported in the Expenditure Reporting system... Indirect costs claimed are part of the total grant award amount, not in addition to the grant award amount." (TEA General and Fiscal Guidelines, eff. 7/1/2025, p. 39)

TEA may not further limit indirect costs, though the authorizing statute may cap administrative costs separately (TEA General and Fiscal Guidelines, eff. 7/1/2025, p. 39). For Title I, Part A: "The authorizing statute does not limit the amount of funds that may be budgeted to administer the program, including direct administrative costs" (2025-2026 ESSA Consolidated Program Guide, p. 15).

Background definition: indirect (F&A) costs are costs for a common or joint purpose that cannot be readily assigned without disproportionate effort (2 CFR § 200.1); business office, personnel, payroll, HR, purchasing are typically indirect (FASRG v20 Module 1: Financial Accounting & Reporting, p. 151).

Where this comes from

• 2026-2027 ESSA Consolidated Program Guidelines, Title I, Part A, Limitation of Administrative Funds, Indirect Costs, page 15. Open the guide
• 2025-2026 ESSA Consolidated Program Guidelines, Title I, Part A, pages 14-15; Title II, Part A, pages 76-77. Open the guide
• TEA General and Fiscal Guidelines (effective 7/1/2025), Indirect Costs, page 39. Open the guidelines
• 34 CFR 76.561, 76.563 and 76.569. Open on eCFR
• 2 CFR 200.1, Definitions, "Indirect cost". Open on eCFR
• FASRG Update 20, Module 1: Financial Accounting and Reporting, 1.4.3.2 Indirect Costs, page 151. Open the module

Related questions

• How do I move indirect cost revenue from a grant fund to the General Fund (199)?