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Department of FinanceFiscal Systems and Consulting Unit

Pro Rata/Statewide Cost Allocation Plan Overview 2011

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Agenda

• Introduction/Overview

• State’s Full Cost Recovery Policy

• Define Central Service Agency Cost

• Central Service Cost Allocation

• Reports

• Budgeting for Pro Rata/SWCAP

• Recoveries

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Full Cost Recovery Policy

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The state policy is for departments to recover full costs whenever goods or services are provided for others.

The full cost includes all cost attributable directly to the activity plus a fair share of indirect costs.

Full Cost Recovery Policy

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Full Cost Recovery Policy

GC 11010 ~ When billing other entities, state agencies supported by the General Fund are required to include an administrative cost factor.

SAM 8752 ~ Departments providing goods or services to others will recover full costs. This applies to all departments regardless of funding sources and in all cases unless a department is specifically exempted by law.

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Elements of Full Cost

• Direct Costs - directly assignable to a program:

– Salaries and wages

– Equipment

– Operating expenses (not included in use allowance calculations)

– Travel expenses incurred to carry out the federal award

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Elements of Full Cost• Indirect Costs - not directly assignable to

a program:

a) Departmental (overhead) costs assigned to many programs:

Executive staff

Information technology

Accounting staff

Budget staff

Other

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Elements of Full Cost

b) Statewide indirect costs:

Fair share of costs incurred by central administrative service agencies.

Pro Rata (special funds)

SWCAP (federal funds)

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Elements of Full Cost

Indirect Costs

Department’s IndirectCosts

(Budgets, IT, Acctg,etc.)

Pro Rata Costs(CSA cost allocation

to special funds)

SWCAP Costs(CSA cost allocation

to federal funds)Only 60 departments

have SWCAP

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Elements of Full Cost

Direct Costs (DC) $ XXXX

Indirect Costs (IC)a) Departmental $ XX

b) Statewide:

Pro Rata XX or

SWCAP XX XXXX

Total Costs (TC) $XXXXX

DC + IC = TC (full cost)

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What is a Central Service Agency (CSA) Cost?

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Central Service Agency CostsState Administrative Manual Section 8753Central service costs are those amounts expended by central service departments and the Legislature for overall administration of state government and for providing centralized services to state departments.. These functions are necessary for state operations and are centralized to provide efficient and consistent statewide policy and services.

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Central Services

Function Code

Central Service Workload Unit Source

Finance (DOF)

004 Audits Audit Hours DOF/OSAE

005 Budgets Budget Hours DOF/Admin

010 CALSTARS State Ops $ DOF/Sch. 10

California Technology Agency

105 CA Technology Agency State Ops $ DOF/Sch. 10

Financial Information Systems for California

110Financial Information System for California (SWCAP only)

State Ops $ DOF/Sch. 10

State Controller’s Office (SCO)

201 Accounting Transactions SCO

202 Claim Audits Warrants SCO

203 Payroll Warrants SCO

204 General Disbursements Warrants SCO

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Central Services

Function Code

Central Service Workload Unit Source

State Controller’s Office (SCO)

205 Field Audits Audit Hours SCO

211 PPSD/SDD Positions SCO

State Treasurer’s Office (STO)

301 Investment (Pro Rata Only) Interest Earned SCO

302 Item Processing Warrants SCO

303 Cash Mgmt/Public Finance State Ops $ DOF/Sch. 10

400 State Personnel Board (SPB) Positions SCO

410 Dept. Personnel Admin (DPA) Positions SCO

510 Office of Admin Law (OAL) Review Hours OAL

520 CA State Library (CSL) State Ops $ DOF/Sch.10

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Central Services

Function Code

Central Service Workload Unit Source

600Health Benefits (HB) for Annuitants (Retired)

HB Costs for Active Employees

SCO/PERS/DPA

601Dental Benefits (DB) for Annuitants' (Retired)

DB Costs for Active Employees

SCO/PERS/DPA

Department of Justice (DOJ)

605 Legal (SWCAP Only) Attorney Hours DOJ

607 Tort Liability (SWCAP Only) Attorney Hours DOJ

700 & 705 Agency Secretaries

Wtd Avg. of State Ops. for the Depts. they oversee State Ops/Sch.10

799 Bureau of State Audits (BSA) Audit Hours DOF/FSCU

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Central Services

Function Code

Central Service Workload Unit Source

800 Legislature (Pro Rata Only)Sum of Past Actual

DOF/FSCU

805Legislative Counsel Bureau

(Pro Rata Only)Sum of Past Actual

DOF/FSCU

810 Governor’s Office (Pro Rata Only)Sum of Past Actual

DOF/FSCU

815Office of Planning & Research (Pro Rata Only)

Sum of Past Actual

DOF/FSCU

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Central Service Cost Allocation

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Central Service Cost Allocation

Pro Rata Plan Recovery of central service costs from special

and certain non-governmental cost funds

Statewide Cost Allocation Plan (SWCAP) Recovery of central service costs from federal

funds

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Central Service Cost AllocationPro Rata:

Allocate costs to departments by function

Distribute department’s total allocation to each fund based on the fund’s proportion of total funding

Classify each fund’s cost as billable or nonbillable

SWCAP:

Allocate costs to departments by function

Distribute department’s total allocation to federal fund based on its proportion of total funding

Federal fund is only billable fund

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Central Service Cost Allocation

1) Obtain workload and expenditure data from the CSAs:

Past year actual workload data

Past year actual expenditures (must tie to year-end financial statements)

Budget year estimate expenditures

2) Calculate and distribute CSA costs to state departments based on workload

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Central Service Cost Allocation3) Distribute total departmental allocation

Pro Rata – proportionately to all funds in the department based on each fund’s percentage of total departmental funding.

SWCAP – proportionately to the federal fund based on its percentage of total departmental funding.

SWCAP Method A Calculation:

Department’s Total SWCAP

Allocation

Federal Funding State Operations

X =Department’s

Budgeted SWCAP

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4) Determine the total allocated to each fund

Calculate the total allocation using the departmental allocation for each fund (PY and BY) from Step 3 and the BY estimate from two years ago (PY estimate).

Central Service Cost Allocation (Pro Rata Only)

PY PY Roll - BY Total Actual Estimate Forward Estimate Allocation

– = + =

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Central Service Costs Allocation

5) Classify the allocation from Step 4 as billable or nonbillable funds (Pro Rata only)

• Billable funds:

Funded by special revenue sources such as fees, licenses, penalties, assessments, interests, etc.

• Nonbillable funds: General FundFederal FundsSpecial Deposit Fund

(SWCAP only federal fund is billable)

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Pro Rata/SWCAP ProcessCSA Reported Workload Data

PY Actual and BY Estimate

Pro Rata

Reports

CSA Cost Allocation

CSA Reported Expenditure Data

PY Actual and BY Estimate

Budget Data (Schedule 10s)

Miscellaneous Agencies

Reported Data

SWCAP

Reports

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Reports

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Reports

Pro Rata Detail by Functions• Pro Rata allocation for each function

Pro Rata Detail by Funds• Pro Rata allocation for each fund

SWCAP Detail by Agency• SWCAP allocation for each function

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Budgeting for Pro Rata

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Budgeting for Pro RataPro Rata Assessment Sheet (green sheet)

• Does not include amounts less than $1,000 or negative amounts.

• Finance budget analysts complete the assessment sheets for billable funds only.

• Finance budget analysts forwards assessment sheet(s) to the departments for certification.

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Pro Rata and SWCAP

• Departments and Finance budget analyst must verify that correct budgeted Pro Rata and SWCAP amounts are reflected on the Supplementary Schedule of Operating Expenses and Equipment (DF-300).

Pro Rata object code 330438

SWCAP object code 330439

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Budgeting for SWCAP(Federal Recoveries)

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Budgeting for SWCAP

All departments receiving federal funds must budget and recover SWCAP.

If the federal grant limits administrative costs to a certain percent of the total grant, the amount available for administrative costs must be shared between departmental indirect costs and statewide indirect costs.

Finance budget analyst receives SWCAP apportionment sheet (pink).

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Budgeting for SWCAP

• Department budget analyst, in collaboration with Finance budget analyst, determine if the Method A calculation results in an equitable budgeted amount, or if a Method B should be used.

• Department certification and Finance approval is required.

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Recoveries

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Pro Rata Recoveries

Pro Rata Certification• In June Finance certifies Pro Rata billable

assessments to the SCO.

•SCO notifies state entities of their Pro Rata assessments.

•SCO will set-up the transfers to occur automatically on a quarterly basis.

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SWCAP Recoveries

• SWCAP Plan submitted/approved to the federal government.

• Methods of SWCAP Cost Recovery:

ICRP’s (Indirect Cost Rate Proposal) CAP (Cost Allocation Plan) PACAP (Public Assistance Cost Allocation Plan) Direct billing

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SWCAP Recoveries

• As a general rule ICRP’s, CAP’s, and PACAP’s are to be filed with the department’s cognizant federal agency at least six months prior to the fiscal year that applies.

• ICRP’s, CAP’s, and PACAP’s must be submitted to the Department of Finance for approval before filing with the cognizant federal agency.

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SWCAP Recoveries• State departments must bill the federal government

for direct and indirect costs. Departments are responsible for complying with federal and state requirements to ensure that SWCAP costs can be recovered from the federal government.

• Each federally funded state department must initiate the transfer process via a Transaction Request, TR form CA 504. Transfers are not done automatically.

• SAM section 8755.2 explains transfers of SWCAP recoveries to the General Fund.

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• Departments submit TR form CA 504, to SCO with a copy to FSCU and a copy to the department’s Finance Budget analyst.

• SWCAP transfer(s) are due within 30 days after the end of a quarter where a recovery occurs.

• SWCAP recoveries are tracked, reviewed, and reported by FSCU.

• State departments will be contacted for discrepancies.

SWCAP Recoveries

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SWCAP Recoveries• If a department has not transferred federal funds

to the General Fund on a timely basis, Finance has the authority to enforce recovery by instructing the SCO to transfer the amount that should have been transferred pursuant to GC Section 13332.02.

• Control Section 8.54 was added in the 2010-11 Budget Act which provides authority to reduce appropriation items when required transfers are past due.

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SWCAP Recovery Process

BillFederal Fund

for Direct Plus IndirectCosts Receipt in

FederalFund

TransferSWCAP to

General Fund

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References

• Pro Rata/SWCAP:

–Variety of information:http://www.dof.ca.gov/FISA/PROSWCAP/PROSWCAP.htm

• Federal information:

–Federal Circular A-87:http://www.whitehouse.gov/omb/circulars/a087/a87_2004.html

–Cost Principles and Procedures (ASMB C-10):http://www.hhs.gov/grantsnet/state

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Contacts

Phone: (916) 445-3434

Pro Rata Analyst – Andrew Erias (ext 2138)

SWCAP Analyst – Natalie Villanueva (ext 2139)

E-mail: FIPROSWP@dof.ca.gov

DOF Website: http://www.dof.ca.gov

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