This brochure provides guidelines for State governments seeking to recover the costs of services provided by central service-type activities to grantee State departments and the indirect cost of grantee State departments. As a prerequisite to such recovery, States must develop and submit to the Department of Health, Education, and Welfare a formal statewide cost allocation plan for central support services. A formal plan for allocating indirect costs of each grantee department must also be submitted to that Federal agency which has the predominant dollar involvement in the department. This brochure describes, in general terms, the processes of indirect cost rate determination and presents instructions for the submission of rate proposals. Appended are Bureau of the Budget Circular A-87, "Principles for Determining Costs Applicable to Grants and Contracts with State and Local Governments"; sample cost allocation plan formats; sample negotiation agreements; and the criteria used to determine the assigned negotiation responsibilities of Federal agencies. (DE)